Q1 2026 Precision Drilling Earnings Call

April 30, 2026

Speaker #1: Dispensar and listen-only mode. After the speaker's presentation, there'll be a question-and-answer session where we will take questions from research analysts. To ask a question during the session, you'll need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised today's conference is being recorded.

Speaker #1: I would now like to end the conference over to your speaker today, Lavonne Zdunich, Vice President of Investor Relations. Please go ahead.

Speaker #2: Welcome, and thank you, everyone, for joining Precision Drilling's first quarter conference call and webcast. Today, I'm joined by Carey Ford, our President and CEO, and Dustin Hoening, our CFO.

Speaker #2: Please note that some comments today will refer to non-IFRS financial measures and include forward-looking statements, which are subject to a number of risks and uncertainties.

Speaker #2: For more information on financial measures forward-looking statements and risk factors, please refer to our news release MDNA and Financial Statements, which are now available on CDAR and EDGAR.

Speaker #2: Before I pass the call over, I would like to highlight a couple of points from our news release. First, utilization-improved meaningful in the quarter compared to Q1 of 2025.

Speaker #2: It increased 7% in Canada and 24% in the US, even as industry recounts declined 7% in both markets. This performance underscores the value customers continue to see in our high-performance, high-value strategy.

Speaker #2: Second, we delivered strong progress on our 2026 priorities: growing revenue year over year, generating $63 million in operating cash flow, and returning capital to shareholders through debt reduction and share repurchases.

Speaker #2: In the first quarter, Precision had $123 rigs operating globally, and remained the second most active driller in North America. With that, I'll pass it over to Dustin.

Speaker #3: Thank you, Lavonne, and good morning. Good afternoon for those calling from different locations. Before we cover our 2026 Q1 financial results and outlook, I'll briefly comment on our capital allocation strategy.

Speaker #3: As you're likely aware, Precision has a long-standing reputation for publishing clear and transparent strategic priorities, aligned with enhancing the competitive positioning of the business and driving enhanced shareholder returns.

Speaker #3: Over the last decade, Precision's free cash flow-generating abilities have allowed us to outpace expected timelines for delivering on major strategic initiatives, positioning the business with rapidly increasing financial flexibility.

Speaker #3: We remain committed to our shareholder return targets while responsibly investing back into the business with a returns-based mandate. These investments are paying dividends, as we anticipate record Q2 activity levels in Canada and a notably strengthened utilization and customer mix in the US evolving.

Speaker #3: Maximizing strong free cash flow remains central to our strategy. Moving on to first quarter results, despite a recurring and expected heavy Q1 working capital build, Precision generated $63 million of cash from operations, capital expenditures were $65 million, comprised of $35 million for sustaining and infrastructure, and $30 million for rig upgrades.

Speaker #3: These investments were made in step with our shareholder return commitments, reducing debt by $25 million and allocating $4 million toward share buybacks. We recorded adjusted EBITDA of $124 million, which equates to $143 million before share-based compensation expense, compared with prior-year Q1 EBITDA of $137 million, $140 million before share-based compensation expense.

First utilization improved meaningful in the quarter compared to q1 of 2025 it increased 7% in Canada and 24% in the US, even as industry rate counts declined 7% in both markets.

Us even as industry rigged accounts declined 7% in both markets.

Speaker #3: Although operating results exceeded prior year, this was offset by a larger stock-based compensation accrual, resulting from our share price appreciating 39% during the quarter.

Priorities, growing Revenue, year-over-year generating 63 million in operating, cash flow, and returning Capital to shareholders through debt, reduction, and share repurchases.

Second we delivered strong programs on our 2026 priorities growing Revenue. Year-over-year generating 63 million in operating cash flow and returning Capital to shareholders through debt, reduction, and share repurchases.

This performance, underscores the value customers continue to see in our high-performance high-value strategy.

This performance underscores the value customers continue to see in our high-performance, high-value strategy.

Speaker #3: Net earnings were $18 million, compared to $35 million in the first quarter of 2025. In Canada, drilling activity averaged $79 active rigs, an increase of 5 rigs from Q1 2025.

In the first quarter, Precision had 123 rigs operating globally and remained the second most active driller in North America with that. I'll pass it over to Dustin.

Second, we delivered strong programs on our 2026 priorities, growing revenue year-over-year, generating $63 million in operating cash flow, and returning capital to shareholders through debt reduction and share repurchases.

Speaker #3: Our reported Q1 daily operating margins were $14,282, compared to $14,780. In the first quarter of 2025, falling within our prior guidance range. During the first quarter, Precision's operating margins were slightly impacted by rig mix, with stronger demand requiring a higher proportion of super singles and doubles working through the winter.

In the first quarter Precision had 123 rigs operating globally. And remained the second most active driller in North America.

With that, I'll pass it over to Dustin.

Thank You, Leon and good morning. Good afternoon for those calling from different locations, before we cover, our 2026, q1 Financial results, and Outlook, I'll briefly comment on our Capital allocation strategy as you're likely aware. Precision has a long-standing reputation for publishing clear and transparent. Strategic priorities aligned with enhancing the competitive positioning of the business and driving enhanced shareholder returns

Thank you, Leon, and good morning. Good afternoon for those calling from different locations. Before we cover our 2026 Q1 financial results and outlook, I'll briefly comment on our capital allocation strategy. As you're likely aware, Precision has a long-standing reputation for publishing clear and transparent strategic priorities aligned with enhancing the competitive positioning of the business and driving enhanced shareholder returns.

Speaker #3: In the US, we averaged $37 active rigs, inline sequentially from Q4, and an increase of 7 rigs from prior-year Q1. Our daily operating margins for the quarter were US $9,291, compared to US $8,754 sequentially from Q4, slightly exceeding our prior guidance range.

Over the last decade, Precision's free cash flow generating abilities have allowed us to outpace expected timelines for delivering on major strategic initiatives, positioning the business with rapidly increasing financial flexibility.

Thank you, Levon, and good morning. Good afternoon for those calling from different locations. Before we cover our 2026 Q1 financial results and outlook, I'll briefly comment on our capital allocation strategy. As you're likely aware, Precision has a long-standing reputation for publishing clear and transparent strategic priorities aligned with enhancing the competitive positioning of the business and driving enhanced shareholder returns.

Thank you, Lavonne, and good morning. Good afternoon for those calling from different locations. Before we cover our Q1 2026 financial results and outlook, I'll briefly comment on our capital allocation strategy. As you're likely aware, Precision has a long-standing reputation for publishing clear and transparent strategic priorities, aligned with enhancing the competitive positioning of the business and driving enhanced shareholder returns.

We remain committed to our shareholder return targets while responsibly investing back into the business with a return space mandate

Have allowed us to outpace expected timelines for delivering on major strategic initiatives positioning the business with rapidly increasing Financial flexibility.

Over the last decade, precision's free cash flow. Generating abilities have allowed us to outpace expected timelines for delivering on major strategic initiatives positioning the business with rapidly increasing Financial flexibility.

Speaker #3: Internationally, Precision averaged 7 active rigs, down 8 rigs from prior-year Q1. International day rates averaged US $51,596, an increase of 4% from prior year, all due to rig move revenues.

These Investments are paying dividends as we anticipate record Q2 activity levels in Canada, and a notably strengthened utilization and customer mix in the US. Evolving maximizing, strong free, cash flow remains Central to our strategy.

These investments are paying dividends as we anticipate record Q2 activity levels in Canada and a notably strengthened utilization and customer mix in the US. Evolving, maximizing strong free cash flow remains central to our strategy.

we remain committed to our shareholder return targets while responsibly investing back into the business with a return space mandate

We remain committed to our shareholder return targets while responsibly investing back into the business with a return space mandate.

Speaker #3: During the quarter, rig margins were unfavorably impacted by one Kuwait rig coming down, offset by one reactivated rig in Saudi Arabia. We incurred US $2 million of one-time charges associated with this reactivation, and in addition, recognized added logistics costs tied to the Middle East conflict.

These investments are paying dividends as we anticipate record Q2 activity levels in Canada, and a notably strengthened utilization and customer mix in the US evolving.

These Investments are paying dividends as we anticipate record Q2 activity levels in Canada, and a notably strengthened utilization and customer mix in the US evolving.

Maximizing, strong, free, cash, flow remains Central to our strategy.

Moving on to first quarter results. Despite our recurring and expected heavy q1 working capital, build Precision, generated. 63 million of cash from operations. Capital expenditures were 65 million comprised of 35 million for sustaining and infrastructure and 35 30 million for rig upgrades,

Moving on to first quarter results, this despite our recurring and expected heavy q1 working capital, build Precision, generated, 63 million of cash from operations. Capital expenditures were 65 million comprised of 35 million for sustaining and infrastructure and 35 30 million for rig upgrades,

Moving on to first quarter results.

These investments were made in step with our shareholder return commitments, reducing debt by $25 million and allocating $4 million towards share buybacks.

Speaker #3: In our CMP segment, adjusted EBITDA was $18 million, in line with prior-year Q1. Increased well-servicing demand in Canada more than offset the impacts of winding down our US operations back in the second quarter of 2025.

This despite our recurring and expected heavy q1 working capital, build Precision, generated. 63 million of cash from operations. Capital expenditures were 65 million comprised of 35 million for sustaining and infrastructure. And 35 30 million for rig upgrades,

Moving on to first quarter results, this, despite our recurring and expected heavy Q1 working capital bills, Precision generated $63 million of cash from operations. Capital expenditures were $65 million, comprised of $35 million for sustaining and infrastructure, and $30 million for rig upgrades.

We recorded adjusted. Evida of 124 million, which equates to 143 million before, share-based compensation, expense, compared with prior year, q1, evida of 137 million 140 million for for share-based compensation expense.

We recorded adjusted Eva of 124 million, which equates to 143 million before, share-based compensation, expense, compared with prior year, q1, evida of 137 million 140 million for for share-based compensation expense.

These Investments were made in step with our shareholder. Return, commitments, reducing debt by 25 million and allocating 4 million towards share BuyBacks

These investments were made in step with our shareholder return commitments, reducing debt by $25 million and allocating $4 million towards share buybacks.

Speaker #3: Moving on to forward guidance, I will begin with our expectations for the second quarter of 2026. Starting in Canada, as I previously alluded to, our strong presence in Canada's unconventional natural gas and heavy oil markets is expected to generate record activity levels this quarter.

Although operating results exceeded prior year, this was offset by a larger stock-based compensation approval resulting from our share price, appreciating 39% during the quarter.

Although operating results exceeded prior year. This was offset by a larger stock-based compensation acral resulting from our share price appreciating 39% during the quarter.

Net earnings were 18 million compared to 35 million in the first quarter of 2025.

We recorded adjusted ibida of 124 million, which equates to 143 million before, share-based compensation, expense, compared with prior year, q1, evida of 137 million 140 million before share-based compensation expense.

We recorded adjusted EBITDA of $124 million, which equates to $143 million before share-based compensation expense, compared with prior year Q1 EBITDA of $137 million, or $140 million before share-based compensation expense.

Speaker #3: Our ability to capitalize is largely due to growing demand, coupled with our prior-year rig upgrades, expanding the pad drilling capabilities of our fleet, and allowing these assets to work through the traditional seasonal constraints of spring breakup.

Although operating results exceeded prior year. This was offset by a larger stock-based compensation acral resulting from our share price appreciating 39% during the quarter.

Although operating results exceeded prior year. This was offset by a larger stock-based compensation approval resulting from our share price, appreciating 39% during the quarter.

Net earnings were 18 million compared to 35 million in the first quarter of 2025.

Net earnings were $18 million, compared to $35 million in the first quarter of 2025.

Speaker #3: For the full quarter, we expect to average active rig counts to be approximately 60 rigs, a 20% increase from the 50 average rigs working in prior-year Q2.

In Canada, drilling activity, averaged 79 active brakes, an increase of 5 rigs from q1 2025, a reported q1 daily, operating margins were 14,282 compared to 14,780 in the prior first quarter of 2025 following within our prior guidance range.

In Canada, drilling activity averaged 79 active rigs, an increase of 5 rigs from Q1 2025. Reported Q1 daily operating margins were $14,282, compared to $14,780 in the prior first quarter of 2025, falling within our prior guidance range.

In Canada, drilling activity averaged 79 active rigs, an increase of 5.

During the first quarter.

In Canada, drilling activity averaged 79 active rigs, an increase of 5.

During the first quarter.

Speaker #3: We expect the end of the quarter to be at the mid-70s, up a similar percentage from prior year. As a result of more super singles working, our operating margins in Canada are expected to range between $12,000 and $13,000 per day, slightly lower than normalized prior-year Q2, all due to rig mix.

Impacted by rig mix with stronger demand, requiring a higher proportion of super singles and doubles working through the winter.

Speaker #3: Keep in mind that prior-year quarter operating margins were materially impacted by one-time customer upfront payments for rig upgrades. Our expectation is that pricing levels will remain firm within our super single and super triple fleet.

in the US, we

Speaker #3: In the US, we expect to sustain the momentum we've built in the last year. Early in Q2, we experienced increased contract churn with multiple rigs falling idle between jobs.

Sequentially from Q4 slightly exceeding. Our prior guidance range.

Speaker #3: This will correct over the next month or so with our rig count increasing to 35 rigs by next week, exiting the quarter at our annual high within the high 30s.

Internationally, Precision averaged 7 active rigs, down 8 rigs from the prior year Q1.

Speaker #3: Beyond that level, we expect further Precision rig count increases related to higher oil prices and our upgrade program. For the second quarter, we expect our operating margins to range between US $7,500 and US $8,500 a day, due to increased reactivation costs tied to rig deployments through Q2 and into Q3.

International day rates averaged US$51,596, an increase of 4% from the prior year, all due to rig move revenues.

During the quarter, rig margins were unfavorably impacted by one rig in Kuwait, with the rate coming down, offset by one reactor break in Saudi Arabia.

Speaker #3: Given increased market demand for drilling rigs and Precision's super triples, we are in the process of implementing price increases which will flow to the back half of the year in 20 through the back half of the year 26.

We incurred US $2 million of one-time charges associated with this reactivation, and, in addition, recognized added logistics costs tied to the Middle East conflict.

And our CMP segment. Adjusted EBITDA was $18 million, in line with prior year Q1?

Speaker #3: Internationally, we expect to run 7 rigs. However, operating margins will be lower than prior year, due to one higher margin Kuwait rig coming down in Q1.

Increased well servicing demand in Canada more than offset the impacts of winding down our U.S. operations back into the second quarter of 2025.

Moving on to forward guidance, I will begin with our expectations for the second quarter of 2026.

Speaker #3: Offset by recently reactivated lower margin rig in Saudi Arabia. For Q2, we expect to incur additional operating costs in response to ongoing tensions in the Middle East.

Starting in Canada, as I have previously alluded to our strong presence in Canada is unconventional natural gas and heavy, oil markets is expected to generate record activity levels of Florida.

Speaker #3: Our CMP business continues to generate strong free cash flow driven by our well-servicing and surface rentals business lines. For Q2, we expect EBITDA to remain in line with prior-year levels.

Speaker #3: Moving on to forward guidance for the full year, we've increased our capital expenditures budget to $265 million, up from prior guidance of $245 million, which is now comprised of $168 million for sustaining and infrastructure, and $97 million for upgrades.

Our ability to capitalize is largely due to growing demand coupled with our prior year rig upgrades, expanding the pad drilling capabilities of our fleet and allowing these assets to work through the traditional seasonal constraints of spring breakup.

For the full quarter, we expect average active rig counts to be approximately 60 rigs, a 20% increase from the 50 average rigs working prior year, Q2.

Speaker #3: This increase includes two Canadian super triple rig upgrades, underpinned by multi-year contract commitments, plus various oil-weighted upgrade opportunities in both Canada and the US.

We expect the end of the quarter to be at the mid-700s, up a similar percentage from the prior year.

Speaker #3: Of note, we anticipate Q2 capital expenditures to be disproportionately high this quarter due to timing of bulk deliveries and scheduled maintenance capital projects, leveling out through the back half of the year.

As a result of more Super Singles working, or operating margins in Canada, are expected to range between $12,000 and $13,000 per day. Slightly lower than normalized prior year Q2, all due to rig mix.

Keep in mind that the prior year quarter operating margins were materially impacted by one-time customer upfront payments for rig upgrades.

Speaker #3: Full-year depreciation is expected to be $310 million, and cash interest expense from debt is expected to be approximately $45 million. Our effective tax rate is expected to be approximately 25% to 30%, with cash taxes remaining low in 2026.

Our expectation is that pricing levels will remain firm within our super single and super triple Fleet.

In the U.S., we expect to stay in the momentum we built in the last year.

Early in Q2, we experienced increased contract terms with multiple rigs, with spot rigs falling idle between jobs.

Speaker #3: For 2026, we expect SG&A to stay flat at approximately $95 million, before share-based compensation expense. As previously communicated, share-based compensation guidance for the full year would range between $25 million and $45 million, assuming a share price of $100 to $140, and a one-times multiplier.

This will correct over the next month or so, with our recount increasing to 35 breaks by next week, exiting the quarter at our annual high within the high 30s.

Beyond that level, we expect further Precision account increases related to higher oil prices and our up-rate program.

Speaker #3: Our long-term target to achieve a net debt-to-adjusted EBITDA of less than one times remains firmly in place. In 2026, we plan to reduce debt levels by at least 100 million while allocating up to 50% of free cash flow to share repurchases.

Speaker #3: Today, we have an average cost of debt of $6.6% and over $433 million in total liquidity. With that, I'll pass it over to Carey.

Speaker #3: Thank you, Dustin. And good morning and good afternoon to everyone. From my prepared remarks, I plan to cover four areas. First, an update on our Middle East operations.

Speaker #3: Second, how we are growing revenue aligned with our first strategic priority. Third, our North American market outlook. And fourth, a returns-focused mindset that is foundational to Precision Drilling.

Speaker #3: For an update on our Middle East operations, I want to recognize Precision's leadership and crews for their performance over the past few months. Amid a dynamic regional environment and persistent uncertainty about where the conflict may lead next.

Speaker #3: In the face of these challenges, our team continues to focus on personnel safety, and with all seven rigs delivering excellent results for our customers.

Speaker #3: We are all extremely proud of this team. Moving on to progress on our first strategic priority: growing revenue and deepening customer relationships. We are succeeding on several fronts, but I will focus on three.

Speaker #3: Field performance, our upgrade program, and international optionality. There are many ways we measure field performance, but in general, field performance is almost perfectly correlated with customer satisfaction, which is also almost perfectly correlated with the drilling contractor's ability to grow revenue.

Speaker #3: Now, forgive me, as I will briefly get into the weeds talking about a key field performance metric, which is mechanical downtime. This is the percentage of time a rig is down in the field due to a mechanical issue when it should be making hold for a customer.

Speaker #3: In short, unplanned downtime is bad, and customers don't like it. So we do everything we can to minimize it. For Precision, in Q1, mechanical downtime in the US was 0.59%, and in Canada, it was 0.48%.

Speaker #3: These figures are the best on record for Precision in each market, and we believe they are industry-leading. In Canada, they were achieved in the highest activity Q1 we have had in over a decade.

Speaker #3: So why else is this metric important enough to highlight? The performance results from our business, acting on real-time data flows from the rig, are scaled digital twin initiative, data-driven sourcing of supply chain components, rig crews, and maintenance practicing supporting a data-driven approach, it is a true team effort with technology at the core.

Speaker #3: Furthermore, low downtime numbers are indicative of predictable repeatable performance, which supports safe operations and faster drill times. For those of you on the call who attended our analyst and investor day in Houston one month ago, you saw firsthand how our digital platform is integrated and scaled into our operations, and every operational support function making these results possible and repeatable.

Speaker #3: Now, there are multiple performance metrics demonstrating Precision's progress in the field, and a number of customer records set in the quarter. But I will stop short of covering those in detail and state that our rigs and crews are performing exceptionally well, our customer satisfaction is high, and we are growing revenue.

Speaker #3: But we still have more to prove. For upgrades, we continue to execute our plan and are even expanding our growth investments to include two contracted Canadian super triple rig upgrades for delivery later this year.

Speaker #3: In the first quarter, Precision delivered year-over-year growth in activity and revenue in a declining market, and the success of our upgrade program is a key driver.

Speaker #3: As Dustin pointed out, we expect growth to continue into the second quarter with a record Q2 in Canada and the US rig count exiting June at the year's highest level.

Speaker #3: I'll remind the listeners that our upgrade program succeeds because of our vertical integration, the capital-like nature of many upgrades, and our ability to source opportunities in the two most active regions in Canada and the four most active regions in the US.

Speaker #3: All improving our delivery and return on capital. More on return on capital in a moment. But I'd also like to cover international growth, where we along with our partner have actively engaged with all major Argentine operators and have outstanding bids on multiple rigs.

Speaker #3: We remain excited about the opportunity in Argentina for Precision and are pursuing those opportunities thoroughly. In the Middle East, we have two idle rigs in Kuwait, and if we have more clarity in the outlook for the region, we expect to secure a contract for one of the rigs within the next few months.

Speaker #3: I mentioned on the last conference call that we had deployed an alpha automation system on one rig in Kuwait, and are driving performance on that rig through our alpha remote operations center in Houston.

Speaker #3: I am pleased to report that the rig is now delivering significant reductions in drilling times for the customer and we expect to broaden our technology footprint in the region over the course of the year presenting another opportunity for performance differentiation and revenue growth.

Speaker #3: Moving on to our North American outlook, while WTI prices have been over $80 for two months, our US customers have not immediately reacted by adding rigs.

Speaker #3: In fact, the US land rig count is down slightly year to date. This makes sense to us, as our customers have approved budgets, capital commitments to investors, and they likely want to have some time to assess the staying power of the oil price run-up.

Speaker #3: In addition, there is a lag time between the time a customer contracts a rig and the time that rig goes to work. Over the past few weeks, we have become increasingly confident of the US market hitting an inflection point this summer, with both private and public companies adding rigs and are confident of further rig adds for Precision in Q3 and Q4.

Speaker #3: We have been planning to increase activity in the US since the beginning of the year, and are ready to meet the upcoming demand. In the Canadian market, we are seeing a more immediate impact of higher oil prices, with increased demand for super single rigs operating in heavy oil basins.

Speaker #3: We also expect our super triple fleet to return to near full utilization later this summer, supported by constructive liquids prices and recent market developments that support the FID of Canada LNG Phase 2.

Speaker #3: In both markets, the expected tightness of rig supply is pulling forward some rig contracting discussions by a quarter or two, for both gas and oil customers.

Speaker #3: In our CMP division, coming off a year of activity increases in Q1, we are seeing increased requests for production work from private companies, while our larger customers are firming up plans that point to increased activity in the second half of the year.

Speaker #3: Following the market demand increase, we are expecting the market to tighten for both personnel and equipment in the second half of the year. The final topic I want to cover is Precision's commitment to generating financial returns.

Speaker #3: Dustin covered this topic in his opening comments, and I would like to go a bit deeper. We have been talking about cash flow and return of capital for a decade.

Speaker #3: And over that time, we have demonstrated success and ingrained in our culture the need to generate returns for our investors. Our leadership in sales, operations, and operations support understands the focus and need to incorporate returns into all decisions.

Speaker #3: Although we are talking more about growth and appear to be entering into a growth market, the focus on returns will not diminish. In fact, it will be central to prioritizing capital deployment and, more importantly, critical to maintaining our established reputation with investors for acting as good stewards of their capital.

Speaker #3: I would like to conclude by thanking the Precision crews' field leadership and all Precision employees for their commitment to safety, customer service, and dedication to Precision.

Speaker #3: With that, I will hand the call back to the operator for questions.

Speaker #1: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 11 again.

Speaker #1: We will pause for a moment while we compile our Q&A roster. Our first question comes from Tim Monticello with ATB Capital Markets. Your line is open.

Speaker #3: Hey, good morning and afternoon to everybody.

Speaker #4: Hey, Tim.

Speaker #3: First question, just on your expectations for ASUS pricing improvement. That's a pretty positive comment, given that the pricing sort of stagnated over the last few years.

Speaker #3: How much do you expect pricing to move higher in the back half of the year? And without the maybe talk about where you expect margins to go in the US through the back half from what they were in Q1.

Speaker #4: Yeah. So, Tim, I understand your question. I understand why you're asking it. We typically give margin guidance one quarter forward, so I'll stop short of giving guidance for Q3 and Q4.

Speaker #4: We said in our comments that we are having pricing increase discussions with customers and that those will start to be reflected in the second half of the year.

Speaker #4: So it will have a meaningful impact on our day rates and margins in the second half of the year. I would just say that the US market, a misconception about the market, is that there are a large number of rigs ready to go.

Speaker #4: When customers want them. And I think if we see an increase in rig demand in maybe it's 30 or 40 or 50 rigs, there's a lot of rigs that are not ready to go back to work that will require capital and time to get the rigs back to work and including crewing up the rigs.

Speaker #4: So there's going to be more tightness in the market to stimulate day rate growth than I think the numbers would suggest. I would also say that although we think that the pricing increases will be broad, we can't really quantify them yet because, as I mentioned, we've really just started here in the past few weeks, implementing price increases.

Speaker #3: Okay. Got it. And the rigs that, I I guess, are churning or in between contracts right now, are those going on to new higher rate contracts?

Speaker #4: Some of them are. I'd really like to we attempted to distinguish between our rig increases in the second quarter and our rig increases beyond the second quarter.

Speaker #4: Most of the rig increases in the second quarter are just replacing the churn most of them are actually in gas basins. And aren't really reflective of a market change in demand.

Speaker #4: And where we see the demand increase from oil-based customers is really going to be in Q3 and Q4. Now, that has a follow-on effect in the gas-basing customers recognizing that the market is going to be a bit tighter due to oil demand.

Tim: US pricing improvement, that's a pretty positive development given that the pricing sort of stagnated over the last few years. How much do you expect pricing to move higher in H2 of the year? With that, maybe talk about where you expect margins to go in the US in H2 from where they were in Q1.

Tim Monachello: US pricing improvement, that's a pretty positive development given that the pricing sort of stagnated over the last few years. How much do you expect pricing to move higher in H2 of the year? With that, maybe talk about where you expect margins to go in the US in H2 from where they were in Q1.

Speaker #4: Which is pulling forward some of those rig-add conversations in the gas basins.

Us pricing Improvement that's a pretty positive 1. And given that the the pricing sort of stagnated over the last few years. Um, how much do you expect pricing to move higher in the back half of the year and

Speaker #3: Okay. That's helpful. Are you seeing any change in demand from gas basins, gas prices are pretty weak, and I would imagine there's going to be some incremental supply of associated gas coming out of oil basins?

Cary: Yeah. Tim, I understand your question, and I understand why you're asking it. We typically give margin guidance one quarter forward, so I'll stop short of giving guidance for Q3 and Q4. We said in our comments that we are having pricing increase discussions with customers and that those will start to be reflected in the second half of the year. It will have a meaningful impact on our dayrates and margins in the second half of the year. I would just say that the US market, a misconception about the market is that there are a large number of rigs ready to go, when customers want them.

Carey Ford: Yeah. Tim, I understand your question, and I understand why you're asking it. We typically give margin guidance one quarter forward, so I'll stop short of giving guidance for Q3 and Q4. We said in our comments that we are having pricing increase discussions with customers and that those will start to be reflected in the second half of the year. It will have a meaningful impact on our dayrates and margins in the second half of the year. I would just say that the US market, a misconception about the market is that there are a large number of rigs ready to go, when customers want them.

With that, then maybe talk about where you expect margins to go in the US—a good back half—from what they were in Q1.

Speaker #3: So is that market dynamic changing at all, or is that still pretty strong for you?

Speaker #4: I'll make a couple of comments there on the gas basin. I think that most of the customers now with the outlook for LNG growth and the outlook for gas-fired data center power demand there's some fundamental drivers there that are impacting activity more than the spot price and the spot price is weaker than it has been.

Cary: I think if we see an increase in rig demand in, you know, maybe it's 30 or 40 or 50 rigs. There's a lot of rigs that are not ready to go back to work that will require capital and time to get the rigs back to work, including crewing up the rigs. There's gonna be more tightness in the market to stimulate dayrate growth than I think the numbers would suggest. I would also say that although we think that the pricing increases will be broad, we can't really quantify them yet because, as I mentioned, we've really just started here in the past few weeks implementing price increases.

Carey Ford: I think if we see an increase in rig demand in, you know, maybe it's 30 or 40 or 50 rigs. There's a lot of rigs that are not ready to go back to work that will require capital and time to get the rigs back to work, including crewing up the rigs. There's gonna be more tightness in the market to stimulate dayrate growth than I think the numbers would suggest. I would also say that although we think that the pricing increases will be broad, we can't really quantify them yet because, as I mentioned, we've really just started here in the past few weeks implementing price increases.

Speaker #4: So I think that our customers are less reactive to the spot price than they would have been a couple of years ago. I will say that we are adding rigs in both the Marcellus and the Haynesville and some of them are high-grading where we're replacing incumbents for the customer.

Speaker #4: So it's a little bit tougher to draw a read on the broader market. But we do see our rig counts moving up in the next couple of months in the gas basins.

Yeah, so Tim I, I understand your question, I understand why you're asking it. Uh, we typically give margin guidance, 1 quarter forward. So I'll stop short of giving guidance for Q3 and Q4. Uh, we said in our comments that we are having pricing increase discussions with customers. And that those will start to be reflected in the second half of the year. So it will have a meaningful impact on our day rates and margins in the second half of the year. I would just say that the US market a misconception about the market is that there are a large number of rigs, ready to go uh, when when customers want them. And I think if we see a an an increase in rate, demand in, you know, maybe it's 30 or 40 or 50 rigs uh there's a lot of rigs that are not ready to go. Back to work that will that will require capital and time uh to get the rigs back to work and including uh, crewing up the rigs. So there's going to be more tightness in the market uh, to

Speaker #3: Got it. And for incremental rig adds that you might see through the back half of the year in '27, can you talk about, I guess, the availability of fleet of idle fleet that you have and would those rigs need to be upgraded before they go to work?

Stimulate day rate growth than I think the numbers would would suggest. Uh, I I would also say that um although we we think that the pricing increases will be Broad

uh, we can't really quantify them yet, because as I mentioned we we really just started here in the past few weeks, implementing price increases

Tim: Okay, got it. The rigs that I guess are churning or in between contracts right now, are those going on to new higher rate contracts?

Tim Monachello: Okay, got it. The rigs that I guess are churning or in between contracts right now, are those going on to new higher rate contracts?

Speaker #3: And I guess, what's the scope of that idle capacity?

Speaker #4: Yeah. I would say that in our I'll just say in our capital plan, we have room to move up and reactivate 15 or so rigs that maybe a little bit more than that where we don't have to increase our capital plan.

Cary: Some of them are. We attempted to distinguish between our rig increases in Q2 and our rig increases beyond Q2. Most of the rig increases in Q2 are just replacing the churn. Most of them are actually in gas basins and aren't really reflective of a market change in demand. Where we see the demand increase from oil-based customers is really gonna be in Q3 and Q4. Now, that has a follow-on effect in the gas basin customers recognizing that the market is gonna be a bit tighter due to oil demand, which is pulling forward some of those rig add conversations in the gas basin.

Carey Ford: Some of them are. We attempted to distinguish between our rig increases in Q2 and our rig increases beyond Q2. Most of the rig increases in Q2 are just replacing the churn. Most of them are actually in gas basins and aren't really reflective of a market change in demand. Where we see the demand increase from oil-based customers is really gonna be in Q3 and Q4. Now, that has a follow-on effect in the gas basin customers recognizing that the market is gonna be a bit tighter due to oil demand, which is pulling forward some of those rig add conversations in the gas basin.

Okay. Got it and the ribs that I guess are churning or in between contracts right now? Are those going on to new higher rate contracts?

Uh, some of them are, uh, I'd really like to—we, we, we attempted to distinguish between our rig increases in the second quarter and our rig increases beyond the second quarter. Most of the rig increases in the second quarter are just—

Speaker #4: And we are ready. We have long leads. We have been preparing for an activity increase, as I mentioned, since the beginning of the year.

Speaker #4: Even when the market expectation was flat. So we'll be able to meet that demand. We are staffing up. We are carrying some extra crews, and we'll be carrying some extra crews through the second quarter to make sure that we're able to meet the staffing demand.

Speaker #4: So I think for precision, we're going to be good. I can't really comment on the rest of the industry, but I'll go back to what I said earlier that there's likely a lot more friction in the system than what the numbers may indicate.

Replacing the turn, most of them are actually in gas basins and aren't really reflective of a market change in demand. Where we see the demand increase from oil-based customers is really going to be in Q3 and Q4. Now, that has a follow-on effect in the gas basins, with customers recognizing that the market is going to be a bit tighter due to oil demand, which is pulling forward some of those rig add conversations in the, uh, in the gas basins.

Tim: That's helpful. Are you seeing any change in demand from gas basins? Gas prices are pretty weak, and I would imagine there's gonna be some incremental supply of associated gas coming out of oil basins. Is that market dynamic changing at all or is that still pretty strong for you?

Tim Monachello: That's helpful. Are you seeing any change in demand from gas basins? Gas prices are pretty weak, and I would imagine there's gonna be some incremental supply of associated gas coming out of oil basins. Is that market dynamic changing at all or is that still pretty strong for you?

Speaker #3: All right. Appreciate it. I'll turn it back.

Speaker #4: Okay. Thank you.

Speaker #5: Our next question comes from Derek Podhaizer with Piper Stanley or Lana Sullivan.

Cary: I'll make a couple comments there on the gas basin. I think that most of the customers now with the outlook for LNG growth and the outlook for gas-fired data centers power demand, there's some fundamental drivers there that are impacting activity more than the spot price, and the spot price is weaker than it has been. I think that our customers are less reactive to the spot price than they would have been a couple years ago. I will say that we are adding rigs in both the Marcellus and the Haynesville, and some of them are high grading, where we're replacing incumbents for the customer.

That's helpful. Are you seeing any change in demand from gas based on gas? Uh prices are pretty weak and I would imagine there's going to be some incremental supply of uh associate gas coming out of oil Basin. So is that market Dynamic changing at all? Or is that still pretty, pretty strong for you?

Carey Ford: I'll make a couple comments there on the gas basin. I think that most of the customers now with the outlook for LNG growth and the outlook for gas-fired data centers power demand, there's some fundamental drivers there that are impacting activity more than the spot price, and the spot price is weaker than it has been. I think that our customers are less reactive to the spot price than they would have been a couple years ago. I will say that we are adding rigs in both the Marcellus and the Haynesville, and some of them are high grading, where we're replacing incumbents for the customer.

Speaker #6: Hey. Good morning. Good afternoon, everyone. I guess sticking on the US land theme, Carey, I'm just curious, just given your conversation with customers and obviously a lot of moving pieces between the oil demand or expected oil demand gas demand, which you've talked about, private versus publics.

Uh, I'll make a couple of comments there on the gas base, and I think that most of the customers now, with the outlook for LNG growth and the outlook for gas-fired data center power demand, uh, there's some fundamental drivers there that are—

Speaker #6: Rig count, like you said, we've been stuck in this 500 to 30 level for quite some time now. I guess, what are your expectations when you think about going through second quarter into the second half of the year?

Speaker #6: Where are the industry rig count could potentially go to? And maybe come at it from a private versus public and maybe a basin perspective as well.

Impacting activity, more than the spot price and the spot price is you know, weaker than it has been. So I think that our our customers are less reactive to this spot price than they would have been a couple of years ago.

I will say that we are adding rigs in both the Marcellus and the Haynesville, and some of them are high-grading.

Speaker #4: Yeah. So I think I'll in terms of the broad industry rig adds, we're about 7 or 8 percent of the US market. So we've got a read on our activity increases and it's a little bit harder to read the entire industry.

Cary: It's a little bit tougher to draw a read on the broader market, but we do see our rig counts moving up in the next couple of months in the gas basin.

Carey Ford: It's a little bit tougher to draw a read on the broader market, but we do see our rig counts moving up in the next couple of months in the gas basin.

Where we're placing incumbents for the customer, so it's a little bit tougher to draw a read on the broader market, but we do see our rig counts moving up in the next couple months in the gas station.

Tim: Got it. For incremental rig adds that you might see through the back half of the year in 2027, can you talk about, I guess, the availability of fleet, of idle fleet that you have and, you know, would those rigs need to be upgraded before they go to work? I guess what's the scope of that idle capacity?

Tim Monachello: Got it. For incremental rig adds that you might see through the back half of the year in 2027, can you talk about, I guess, the availability of fleet, of idle fleet that you have and, you know, would those rigs need to be upgraded before they go to work? I guess what's the scope of that idle capacity?

Speaker #4: I think there's enough people out there that are making bets on that. But an industry rig add increase of 40 or 50 rigs does not seem unreasonable to us.

Speaker #4: Where we see the increases from basin perspective, minor increases on average in the Marcellus and the Haynesville. And we've got large market positions in both of that.

Cary: I would say that in our, I'll just say in our capital plan, we have room to move up and reactivate, you know, 15 or so rigs that, maybe a little bit more than that, where we don't have to increase our capital plan. We are ready. We have long leads. We have been preparing for an activity increase, as I mentioned, since the beginning of the year, even when the market expectation was flat. We'll be able to meet that demand. We are staffing up. We are carrying some extra crews, and we'll be carrying some extra crews through the Q2 to make sure that we're able to meet the staffing demand. I think for Precision, we're gonna be good.

Carey Ford: I would say that in our, I'll just say in our capital plan, we have room to move up and reactivate, you know, 15 or so rigs that, maybe a little bit more than that, where we don't have to increase our capital plan. We are ready. We have long leads. We have been preparing for an activity increase, as I mentioned, since the beginning of the year, even when the market expectation was flat. We'll be able to meet that demand. We are staffing up. We are carrying some extra crews, and we'll be carrying some extra crews through the Q2 to make sure that we're able to meet the staffing demand. I think for Precision, we're gonna be good.

Got it. And for incremental rate adds that you might see through the back of the year in ’27, can you talk about, I guess, the availability of fleet—of idle fleet—that you have? And, um, you know, would those rigs need to be upgraded before they go to work, and I guess, the scope of that idle capacity?

Speaker #4: So I think our read-through is probably pretty decent there. Where we're having customers with customer conversations about rig adds in the second half of the year, it's the Permian and the Rockies.

Yeah, I—I would say that in our, I'll just say, in our capital plan, we have room to—

To move up and reactivate.

You know, 15 or so rigs.

that, um,

Speaker #4: And that's thankfully where we have a lot of our idle capacity that's ready to go. So I think we'll be really well positioned to meet that demand.

Speaker #4: And in terms of in terms of private versus publics, certainly the private got on the phone a little bit quicker. Asking about a bit rig availability, but we're starting to see more conversations or having more conversations with public companies about rig adds.

Maybe, maybe a little bit more than that, uh, where we don't have to increase our capital plan, uh, and we are ready. We have long leads, we have, uh, been preparing for activity increases. I mentioned since the beginning of the year, even when the market expectation was flat, so we'll be able to meet that demand. Uh, we are

Cary: I can't really comment on the rest of the industry, but I'll go back to what I said earlier, that there's likely a lot more friction in the system than what the numbers may indicate.

Carey Ford: I can't really comment on the rest of the industry, but I'll go back to what I said earlier, that there's likely a lot more friction in the system than what the numbers may indicate.

Speaker #5: Got it. No, that's really helpful color. I guess on Canada, I'm just curious, maybe if you can help us with a bit more color as far as some of the mix shift that you're seeing between the super singles and the super triples.

What I said earlier is that there's likely a lot more friction in the system than what the numbers may indicate.

Tim: All right. Appreciate it. I'll turn it back.

Tim Monachello: All right. Appreciate it. I'll turn it back.

Cary: Yeah. Thank you.

Carey Ford: Yeah. Thank you.

Speaker #5: I'm just curious if this is a structural change? Just any more color on how you see this developing over time? Is this something secular?

All right, I appreciate it. I'll turn it back. Thank you.

Operator: Our next question comes from Derek Podhaizer with Piper Sandler. Your line is open.

Derek Podhaizer: Hey. Good morning, good afternoon, everyone. I guess sticking on the US land theme, Cary, I'm just curious, just given your conversation with customers and obviously a lot of moving pieces between the oil demand or expected oil demand, gas demand, which you've talked about, privates versus public. Rig count, like you said, we've been stuck in this 530 level for quite some time now. I guess what are your expectations when you think about going through Q2 into the H2 of the year, where the industry rig count could potentially go to, maybe come at it from a private versus public and maybe a basin perspective as well?

Speaker #5: Just how should we think about the mix of the singles versus the triples and how to think about that as we move forward over the next 6 to 18 months or so?

Our next question comes from Derek Potty with Piper Sandler. Your line is open.

Speaker #4: Yeah. Sure. I'll start out and then ask Dustin to kind of fill in some of the numbers. But I would say the demand for our super triples, the 32 super triples we have, in Canada remains strong.

Speaker #4: So we're seeing we always see a little bit of spotty activity in Q2 during spring breakup, but for what we're seeing in the second half of the year, demand is not really changing for the super triples.

Speaker #4: On the super singles, which are driving heavy oil activity, we're seeing increasing demand on that rig class. Based on our position in the marketplace, we are not seeing the Canadian rig count grow.

Hey, uh, good morning. Good afternoon, everyone. Um, I guess sticking on the US land theme, Carey, I'm just curious—just given your conversation with customers and obviously a lot of moving pieces between oil demand, or expected oil demand, um, gas demand, which you've talked about, private versus public rig count, like you said, we've been stuck in this 500 to 530 level for quite some time now. I guess, what are your expectations when you think about going through second quarter into the second half of the year, where the industry rig count could potentially go to? Um, and maybe come at it from a private versus public and maybe a basin perspective as well.

Cary: Yeah. In terms of the broad industry rig adds, you know, we're about 7% or 8% of the US market, we've got a read on our activity increases, and it's a little bit harder to read the entire industry. I think there's enough people out there that are making bets on that. You know, an industry rig add increase of 40 or 50 rigs does not seem unreasonable to us. Where we see the increases from basin perspective, minor increases on average in the Marcellus and the Haynesville, and we've got large market positions in both of that. I think our read-through is probably pretty decent there.

Carey Ford: Yeah. In terms of the broad industry rig adds, you know, we're about 7% or 8% of the US market, we've got a read on our activity increases, and it's a little bit harder to read the entire industry. I think there's enough people out there that are making bets on that. You know, an industry rig add increase of 40 or 50 rigs does not seem unreasonable to us. Where we see the increases from basin perspective, minor increases on average in the Marcellus and the Haynesville, and we've got large market positions in both of that. I think our read-through is probably pretty decent there.

Yeah, so I think, in terms of the broad industry rig ads, you know, we're—

Speaker #4: But we are seeing our rig count grow and we think that's the it's kind of speaks to the performance differentiation and value proposition for our customers.

Speaker #4: And so that is that's the change that we've noticed, but I don't think it's a read-through for the rest of the industry. Dustin, can you talk a little bit maybe about pricing dynamics for what we're seeing on both those rig classes in the doubles?

We're about 7 or 8% of the U.S. markets, so we've got a read on our activity increases, and it's a little bit harder to read the entire industry. I think there's enough people out there that are making bets on that. But, uh, you know,

A an industry rig add increase of 40 or 50 rigs does not seem unreasonable to us.

Speaker #6: Yeah. For sure. And I would actually add on the heavy oil market, one benefit of our upgrade program is we've really been chewing through that seasonality constraint in Q2.

Uh, where we see the increases from a Basin perspective, uh, minor increases on average in the Marcellus and the Haynesville. And we've got

Speaker #6: A lot of the pad-capable rigs we have now 18 going on, 19 pad-capable super singles, which really adds additional capacity into our business model.

Cary: Where we're having customers with customer conversations about rig adds in H2 of the year, it's the Permian and the Rockies. That's, you know, thankfully where we have a lot of our idle capacity that's ready to go. I think we'll be really well-positioned to meet that demand.

Carey Ford: Where we're having customers with customer conversations about rig adds in H2 of the year, it's the Permian and the Rockies. That's, you know, thankfully where we have a lot of our idle capacity that's ready to go. I think we'll be really well-positioned to meet that demand.

Large market positions in both of that. So I think our read-through is probably pretty decent there where we're having

Customers with, uh, customer conversations about Ring ads and second half of the year.

Speaker #6: Just makes that rig class so much more attractive. On a pricing front, I would say that pricing on our super singles and our triples, it's very firm.

It's the Puram and the Rockies.

Speaker #6: We do see some competitive pressures out there, but we intend to sustain our position as a price leader in Canada. And it's really driven by our differentiation.

Derek Podhaizer: Right, yeah.

And that’s, you know, thankfully where we have a lot of our idle capacity that’s ready to go. So I think, uh, we’ll be really well positioned to meet that demand.

Cary: In terms of privates versus publics, certainly the privates got on the phone a little bit quicker, asking about rig availability. We're starting to see more conversations or having more conversations with public companies about rig adds.

Carey Ford: In terms of privates versus publics, certainly the privates got on the phone a little bit quicker, asking about rig availability. We're starting to see more conversations or having more conversations with public companies about rig adds.

Speaker #6: I mean, we've got rig spec. It's our technology offering and I would say on the people front, recruiting and retaining, it's a core competency and it really sets us apart.

And in terms of great, in terms of private versus public, certainly the private got on the phone a little bit quicker, asking about a bit rig, availability, but we're starting to see more conversations, or having more conversations, with the public companies about rigs.

Derek Podhaizer: Got it. No, that's really helpful color. I guess on Canada, I'm just curious maybe if you can help us with a bit more color as far as some of the mix shift that you're seeing between the Super Singles and the Super Triples. I'm just curious if this is a structural change. Just any more color on how you see this developing over time. Is this something secular? Just how should we think about the mix of the Singles versus the Triples, and how to think about that as we move forward over the next, you know, 6 to 18 months or so?

Speaker #6: So we feel really good about capturing that value premium that we're delivering for our customers. On the in the doubles market, it's a little bit different.

Speaker #6: It's oversupplied, highly competitive. We do participate. It's not a core part of our business, but we are not immune to the pricing pressures there.

Speaker #6: And we do see a bit more pricing challenges in the doubles market.

Speaker #4: Yeah. And just to wrap up that pricing conversation, we're as Dustin said, we expect to have 20% more rigs running in Q2 than we did last year.

Cary: Yeah, sure. I'll start out and then ask Dustin to kind of fill in some of the numbers. I would say the demand for our Super Triples, the 32 Super Triples we have in Canada, remains strong. We always see a little bit of spotty activity in Q2 during spring breakup. From what we're seeing in H2 of the year, demand is not really changing for the Super Triples. On the Super Singles, which are driving heavy oil activity, we're seeing increasing demand on that rig class based on our position in the marketplace. We are not seeing the Canadian rig count grow, but we are seeing our rig count grow, and we think that kind of speaks to the performance differentiation and value proposition for our customers.

Carey Ford: Yeah, sure. I'll start out and then ask Dustin to kind of fill in some of the numbers. I would say the demand for our Super Triples, the 32 Super Triples we have in Canada, remains strong. We always see a little bit of spotty activity in Q2 during spring breakup. From what we're seeing in H2 of the year, demand is not really changing for the Super Triples. On the Super Singles, which are driving heavy oil activity, we're seeing increasing demand on that rig class based on our position in the marketplace. We are not seeing the Canadian rig count grow, but we are seeing our rig count grow, and we think that kind of speaks to the performance differentiation and value proposition for our customers.

Speaker #4: And all of those rigs are going to be singles and doubles. So they're going to be lower margin rigs than their super triples. Which impacts the overall margin.

Got it. No, that that's that's really helpful color. Um, I guess the on Canada, I'm just curious. Maybe if you can help us with with a bit more color as far as some of the, uh, mix shift that you're seeing between the super singles. And the super triples, I'm just curious if this is a structural change, just any more color on how you could just developing over time, is this something secular? Just, how should we think about the mix of the signals versus the triples and how to think about that? Um, as we move forward over the next, you know, 6 to 18 months or so,

Speaker #5: All right. That all makes sense. Great color, guys. Really appreciate it. I'll turn it back.

Yeah, sure. I'll I'll start out and then I'll ask Dustin to kind of fill in some of the numbers but uh, I I would say the demand for our super triples. The 32 32 super triples, we have

Speaker #4: Take care, Derek.

Speaker #6: Thanks, Derek.

Speaker #5: Our next question comes from Aaron MacNeil with PD Cowen. Your line is open.

Speaker #7: Hey, everyone. Thanks for taking my questions. By my math, you've deployed call it just over 160 million of upgrade capital over the last two years, maybe another 70 or 80 million, expected this year.

In Canada remains strong. So we're we're seeing, we always see a little bit of spotty activity and and Q2 during spring break up. But uh, for what we're seeing in the second half of the Year, demand is not really changing for the super triples on the super singles, which are driving, uh, heavy oil activity, we're seeing increasing Demand on that rig class.

Speaker #7: I wanted to zero in on the US market specifically. And sort of understand how much capital and the number of rigs that you've upgraded in the US market over the last couple of years, how many you expect to upgrade this year.

Cary: That is, that's the change that we've noticed, but I don't think it's a read-through for the rest of the industry. Dustin, can you talk a little bit maybe about pricing dynamics for what we're seeing on both those rig classes in the doubles?

Carey Ford: That is, that's the change that we've noticed, but I don't think it's a read-through for the rest of the industry. Dustin, can you talk a little bit maybe about pricing dynamics for what we're seeing on both those rig classes in the doubles?

Um, based on our position in the marketplace, we are not seeing the Canadian rig count growth, but we are seeing our account grow. And we think that's the—it's, uh, kind of speaks to the performance differentiation and value proposition for our customers. And so that is, um,

Speaker #7: And then just give us a bit of an update on how you're thinking about returns on that capital, given that we just haven't really seen a durable improvement in margins and utilization has been a bit better, but we continue to see a lot of churn in the contract book.

Dustin: Yeah, for sure. I would actually add on the heavy oil market, one benefit of our upgrade program is we've really been chewing through that seasonality constraint in Q2. A lot of the pad-capable rigs, we have now 18 going on 19 pad-capable Super Singles, which really adds additional capacity into our business model. Just makes that rig class so much more attractive. On a pricing front, I would say that pricing on our Super Singles and our Super Triples, it's very firm. We do see some competitive pressures out there. We intend to sustain our position as a price leader in Canada. It's really driven by our differentiation. I mean, we've got rig spec, it's our technology offering. I would say on the people front, recruiting and retaining is the core competency. It really sets us apart.

Dustin Honing: Yeah, for sure. I would actually add on the heavy oil market, one benefit of our upgrade program is we've really been chewing through that seasonality constraint in Q2. A lot of the pad-capable rigs, we have now 18 going on 19 pad-capable Super Singles, which really adds additional capacity into our business model. Just makes that rig class so much more attractive. On a pricing front, I would say that pricing on our Super Singles and our Super Triples, it's very firm. We do see some competitive pressures out there. We intend to sustain our position as a price leader in Canada. It's really driven by our differentiation. I mean, we've got rig spec, it's our technology offering. I would say on the people front, recruiting and retaining is the core competency. It really sets us apart.

Speaker #4: Yeah. I think first of all, we had a 24% increase year over year in activity relative to a market that went down 7% year over year.

Speaker #4: So I think top line, on activity, that's definitely improved. We've had revenue growth year over year. So that's improved. We've addressed some reasons for margin guidance in Q2.

Speaker #4: We have we're expecting a pretty significant activity ramp, not just in the quarter, but preparing for Q3 and Q4. That's rig reactivations. I mentioned we're going to carry a few more crews to make sure that all of those startups that we have planned are executed very well.

That's the change that we've noticed, but I don't think it's a read through for the rest of the industry of Dustin. Can you talk about? Maybe about pricing Dynamics for what we're seeing them. Both those 3 classes in the double? Yeah, for sure. And I I would actually add on the heavy oil Market 1. Benefit of our upgrade program is we've uh, We've really been chewing through that seasonality constraint in Q2 a lot of the pads capable rigs. We have now 18 going on 19 pad capable super singles which really adds additional capacity into our business model. Just makes that red class so much more attractive. Um, on a pricing front, I would say that pricing on our super singles and our triples, it's it's very fun. Uh, we do see some competitive

Dustin: We feel really good about capturing that value premium that we're delivering for our customers. In the doubles market, it's a little bit different. It's oversupplied, highly competitive. We do participate. It's not a core part of our business, but we are not immune to the pricing pressures there. We do see a bit more pricing challenges in the doubles market.

Dustin Honing: We feel really good about capturing that value premium that we're delivering for our customers. In the doubles market, it's a little bit different. It's oversupplied, highly competitive. We do participate. It's not a core part of our business, but we are not immune to the pricing pressures there. We do see a bit more pricing challenges in the doubles market.

Speaker #4: So I think I don't think it's fair to say that we're not seeing results from the upgrade program. We certainly are. If you look at the top line revenue number, it is flat.

Speaker #4: We're kind of guiding flat on day rates. So day rates are firm. On the upgrade capital, we haven't split out the upgrades between Canada and the US.

Cary: Just to wrap up that pricing conversation, you know, as Dustin said, we expect to have 20% more rigs running in Q2 than we did last year, and all of those rigs are gonna be singles and doubles. They're gonna be lower margin rigs than their Super Triples, which impacts the overall margin.

Pressures out there but we intensive sustain our position as a price leader in Canada and it's really driven by our differentiation. I mean, we've got, uh, brakes back. It's our technology offering and I, I would say on the people front recruiting and retaining it, the core competency and it really sets this apart. So we feel really good about capturing that value premium that we're delivering for our customers on the in the doubles Market, it's a little bit different. It's uh, oversupplied highly competitive. We do participate. It's not a core part of our business, but we are not immune to the pricing pressures there and, uh, we do see a bit more pricing challenges in the doubles Market.

Carey Ford: Just to wrap up that pricing conversation, you know, as Dustin said, we expect to have 20% more rigs running in Q2 than we did last year, and all of those rigs are gonna be singles and doubles. They're gonna be lower margin rigs than their Super Triples, which impacts the overall margin.

Speaker #4: But I would say that in the US market, in the Canadian market, we're typically doing two types of upgrades. We're doing a pad conversion for a super single and then we're doing an upgrade on a super triple pad conversions.

Speaker #4: We'll typically be three to five million dollars in spend. On the super triples, it could be anywhere from kind of four million to high single digits on the upgrade, depending on the term of the contract and the return.

Derek Podhaizer: Right. I know. That all makes sense. Great color, guys. Really appreciate it. I'll turn it back.

As Dustin said, we expect to have 20% more rigs running in Q2 than we did last year. And all of those rigs are going to be singles and doubles. So they're going to be lower. Lower margin rigs than uh they're super triples which impacts the overall mortgage.

Cary: Thank you, Derek.

Carey Ford: Thank you, Derek.

Dustin: Thanks, Derek.

Dustin Honing: Thanks, Derek.

Right, and that all makes sense. Um, great color, guys, really appreciate it. I'll turn it back.

Operator: Our next question comes from Aaron MacNeil with TD Cowen. Your line is open.

Take care. Thank you, sir.

Aaron MacNeil: Hey, everyone. Thanks for taking my questions. By my math, you've deployed, call it, just over CAD 160 million of upgrade capital over the last two years. Maybe another CAD 70 or 80 million expected this year. I wanted to zero in on the US market specifically and sort of understand how much capital and the number of rigs that you've upgraded in the US market over the last couple years, how many you expect to upgrade this year. Then just give us a bit of an update on how you're thinking about returns on that capital, given that we just haven't really seen a durable improvement in margins and, you know, utilization's been a bit better, but we continue to see a lot of churn in the contract book.

Our next question comes from Aaron McNeil with TD Cowen. Your line is open.

Speaker #4: When we're executing these upgrades, we are almost always getting full return of the capital spend within the term of the contract. So a lower dollar upgrade can get paid back in a shorter-term contract.

Hey everyone. Thanks for taking my questions. Um, by my math, you've deployed, call it, just over $160 million of upgrade capital over the last 2 years. Maybe another $70 or $80 million expected this year.

Speaker #4: The US market has been a spot market and we've commented on this many times over the past couple of years. Most of the contracts are six months or pad to pad, sometimes we're getting one-year contracts if we're spending more capital.

I wanted to zero in on the US market specifically and sort of understand how much capital and the number of rigs that you've upgraded in the US market over the last couple of years—how many you expect to upgrade this year?

Speaker #4: But it does introduce some variability after the contract has been signed. And the capital has been returned. Because of the nature of the short-term work, we do have some pockets like we're going to like we're experiencing right now in April, where there's going to be a little bit of white space.

Cary: Yeah. I think first of all, we had a 24% increase year-over-year in activity relative to a market that went down 7% year-over-year. I think top line on activity, that's definitely improved. We've had revenue growth year-over-year, so that's improved. We've addressed some reasons for margin guidance in Q2. We're expecting a pretty significant activity ramp, not just in the quarter, but preparing for Q3 and Q4. That's rig reactivations. I mentioned we're going to carry up 2 more crews to make sure that all of those startups that we have planned are executed very well. I think I don't think it's fair to say that we're not seeing results from the upgrade program. We certainly are.

Carey Ford: Yeah. I think first of all, we had a 24% increase year-over-year in activity relative to a market that went down 7% year-over-year. I think top line on activity, that's definitely improved. We've had revenue growth year-over-year, so that's improved. We've addressed some reasons for margin guidance in Q2. We're expecting a pretty significant activity ramp, not just in the quarter, but preparing for Q3 and Q4. That's rig reactivations. I mentioned we're going to carry up 2 more crews to make sure that all of those startups that we have planned are executed very well. I think I don't think it's fair to say that we're not seeing results from the upgrade program. We certainly are.

And then just give us a bit of an update on how you're thinking about Returns on that Capital. Given that we just haven't really seen a durable Improvement in margins. And, you know, utilization has been a bit better, but we can continue to see a lot of churn in the contract book.

yeah, I think, first of all, we had a

Speaker #4: But I think for the full look back, I think we need to get to the end of the year on the capital spend with a lot of these rigs that are going to be delivered later in this year.

Speaker #4: And we fully expect to see revenue and EBITDA growth in our business year over year.

24% increase year-over-year in activity relative to the market that went down 7% year-over-year. So I think top line, uh, on activity, that's definitely improved. Uh, we've had revenue growth year-over-year, uh, so that's improved. Uh, we've addressed some reasons for, um, margin guidance in Q.

Speaker #7: Gotcha. Okay. Fair enough. Maybe to build on one of Tim's many questions, just given that the US contract durations are shorter with most rolling off by the end of this year, in the context of your comments around pricing increases, do you think margin?

Speaker #7: Or do you think sort of we'll continue to see this churn over the next couple of quarters that might offset some of those pricing gains in the near term?

Cary: If you look at the top-line revenue number, it is flat. We're kind of guiding flat on dayrates, so dayrates are firm. On the upgrade capital, we haven't split out the upgrades between Canada and the US, but I would say that in the Canadian market we're typically doing two types of upgrades. We're doing a pad conversion for a Super Single, and then we're doing an upgrade on a Super Triple. Pad conversions will typically be CAD 3 to 5 million in spend. On the Super Triples it could be anywhere from CAD 4 to 4 million to high single digits on the upgrade, depending on the term of the contract and the return.

Carey Ford: If you look at the top-line revenue number, it is flat. We're kind of guiding flat on dayrates, so dayrates are firm. On the upgrade capital, we haven't split out the upgrades between Canada and the US, but I would say that in the Canadian market we're typically doing two types of upgrades. We're doing a pad conversion for a Super Single, and then we're doing an upgrade on a Super Triple. Pad conversions will typically be CAD 3 to 5 million in spend. On the Super Triples it could be anywhere from CAD 4 to 4 million to high single digits on the upgrade, depending on the term of the contract and the return.

2, we have, we're expecting a pretty significant activity ramp not just in the quarter but but preparing for a Q3 and Q4, uh, that's re reactivation I mentioned, we're going to carry a few more crews to get. Make sure that all of those startups that we have planned are executed very well. So I think um I I don't think it's fair to say that we're not seeing results from the upgrade program. We certainly are uh if you look at the top line revenue number,

Speaker #4: We fully expect to see benefits from pricing increases, more activity covering overhead, and we expect to see a stronger contract book at the second half of the year.

Uh, it is flat. Worked on guiding flat on day rates. So day rates are firm. Uh, on the Upgrade Capital, we haven't split out the upgrades between Canada and the US.

But I would say that, um, you know, in the US market,

Speaker #4: So I won't give guidance on margins for Q3 and Q4, but we think there's a lot of positive drivers for margin. In the second half of the year, the only thing that I would say that might offset that is if we get more activity on the CWC rigs that we purchased in the Powder River.

In the Canadian market, we're typically doing two types of upgrades. We're doing a pad conversion for a super single, and then we're doing an upgrade on the super triple. Pad conversions will typically be $3 million to $5 million in spend. On the super triples, um, it's similar.

Cary: When we're executing these upgrades, we are almost always getting full return of the capital spend within the term of the contract. For the lower dollar upgrade can get paid back in a shorter term contract. The US market has been a spot market, and we've commented on this many times over the past couple of years. Most of the contracts are six months or pad to pad. Sometimes we're getting one-year contracts if we're spending more capital. It does introduce some variability after the contract has been signed and the capital has been returned. Because of the nature of the short-term work, we do have some pockets like we're, like we're experiencing right now in April, where there's gonna be a little bit of white space.

Carey Ford: When we're executing these upgrades, we are almost always getting full return of the capital spend within the term of the contract. For the lower dollar upgrade can get paid back in a shorter term contract. The US market has been a spot market, and we've commented on this many times over the past couple of years. Most of the contracts are six months or pad to pad. Sometimes we're getting one-year contracts if we're spending more capital. It does introduce some variability after the contract has been signed and the capital has been returned. Because of the nature of the short-term work, we do have some pockets like we're, like we're experiencing right now in April, where there's gonna be a little bit of white space.

Speaker #4: And if there's more activity in our 1,200-horsepower rigs, which have slightly lower margins than our 1,500-horsepower rigs. But I think the uplift on margins on the margins and contracts on the 1,500-class rigs are definitely going to be going up.

It could be anywhere from kind of $4 to $4 million to high single digits on the upgrade, depending on the term of the contract and the return. Uh, when we're

Executing these upgrades, we are almost

Always getting, uh, full Return of the capital spend within the term of the contract. So, small lower dollar upgrade can get paid back in a shorter term contract. The US market has been a

Speaker #7: Okay. Makes sense. Thanks, everyone. I'll turn it back.

Speaker #4: Thanks, Aaron.

Speaker #5: Our next question comes from Keith McKay with RBC Capital Markets. Your line is open.

Speaker #8: Hi there. Thanks for taking my questions. Just maybe starting out on the international side, can you just give us a bit more color on the disruptions you faced in Q1 and the reactivation costs you faced in Q1, maybe a quantify those as much as you can for Q1 as well as heading into Q2?

Cary: I think for the full look back, I think we need to get to the end of the year on the capital spend with a lot of these rigs that are going to be delivered later in this year, and we fully expect to see revenue and EBITDA growth in our business year over year.

Carey Ford: I think for the full look back, I think we need to get to the end of the year on the capital spend with a lot of these rigs that are going to be delivered later in this year, and we fully expect to see revenue and EBITDA growth in our business year over year.

Speaker #8: And then more broadly, Carey, how do you think about the international business now, given everything that's happened over there? Do you have a do you place a higher risk premium on deploying assets there and just how do you think about that?

Spot market. And we've commented on this many times over the past couple of years. Most of the contracts are 6 months or had to pad sometimes we're getting 1 year contracts that were spending uh spending more Capital but it does introduce some variability. After the contract has been signed and the capital has been returned um, because of the nature of the short-term work. We do have some Pockets like we're going to like we're experiencing right now in April where there's going to be a little bit of white space but I think for

Speaker #8: Where that business fits within Precision over the longer term?

Aaron MacNeil: Gotcha. Okay, fair enough. Maybe to build on one of Tim's many questions, just given that the US contract durations are shorter with most rolling off by the end of this year, you know, in the context of your comments around pricing increases, you know, do you think that'll translate directly into margin or do you think sort of we'll continue to see this churn over the next couple quarters that might, you know, offset some of those pricing gains in the near term?

For the whole look back, I think we need to get to the end of the year on the capital spend, with a lot of these rigs that are going to be delivered later in this year, and we fully expect to see revenue and even EBITDA growth in our business year-over-year.

Speaker #4: questions. I think Dustin highlighted kind of go one by one there, if I can remember them. So on the rig reactivation cost, it was $2 million US is what it cost us to reactivate the one rig in Saudi.

Gotcha. Okay, fair enough. Um, maybe to build on one of

Tim's many questions. Uh, just given that the U.S. contract durations are shorter, with most rolling off by the end of this year.

Speaker #4: It was higher than what we expected. The rig had been if it was part of all of the rig suspensions in the kingdom. And when we reactivated the rig, the requirements by the customer to get the rig up to spec were just much greater than what we thought.

Speaker #4: And it was a higher cost. Plus, mobilizing the crews back in the country was just more than we thought. But that was a one-time cost.

You know, in the context of your, your comments around pricing increases, you know, do you think that'll translate directly into margin or do you think sort of will continue to see this churn over the next couple quarters that might you know, offset some of those pricing gains in the near term.

Cary: We fully expect to see benefits from pricing increases, more activity, more activity covering overhead, and we expect to see a stronger contract book at the H2 of the year. I won't give guidance on margins for Q3 and Q4, but we think there's a lot of positive drivers for margin in the H2 of the year. The only thing that I would say that might offset that is if we get more activity on the CWC rigs that we purchased in the Powder River, and if there's more activity in our 1200 horsepower rigs, which have slightly lower margins than our 1500 horsepower rigs.

Carey Ford: We fully expect to see benefits from pricing increases, more activity, more activity covering overhead, and we expect to see a stronger contract book at the H2 of the year. I won't give guidance on margins for Q3 and Q4, but we think there's a lot of positive drivers for margin in the H2 of the year. The only thing that I would say that might offset that is if we get more activity on the CWC rigs that we purchased in the Powder River, and if there's more activity in our 1200 horsepower rigs, which have slightly lower margins than our 1500 horsepower rigs.

Speaker #4: What we're seeing right now in terms of disruption, it's getting crews in and out of the country in and out of each country because of flight schedules and airport closures and I'm sure you've read about plenty of the travel disruptions that this war has caused in the region.

We fully expect to see, uh, benefits from pricing increases—more activity, more activity covering overhead, and—

We expect to see a stronger contract book at the second half of the year. So I won't, um,

Speaker #4: There's also some relatively minor well, I would say for us, it's relatively minor. I think some of our what we just call broader oil field service industry peers have reported lots of disruption related to supply chain in the region.

I won't, I won't give guidance on margins for Q3 and Q4, but we think there's a lot of

Speaker #4: But for us, it's having to get parts from one part of the country that's far away where parts are fuel from one part of the country that's far away from where we're drilling when we used to get it very close to where we're drilling.

The thing that I would say that might offset that is if we get more activity on the CWC rigs that we purchased in the Powder River.

Cary: I think the uplift on margins and contracts on the 1500 class rigs are definitely gonna be going up.

Carey Ford: I think the uplift on margins and contracts on the 1500 class rigs are definitely gonna be going up.

Speaker #4: So there's some logistical challenges. It's tough to quantify right now what that cost is going to be. I think it's going to be low single digits impact on profitability on those disruptions.

Aaron MacNeil: Okay. Makes sense. Thanks everyone. I'll turn it back.

And if there’s more activity in our 1,200 horsepower rigs, which have slightly lower margins than, um, than our 1,500 horsepower rigs. But I think the uplift on margins, on the margins and contracts on the, uh, 1,500 class rigs are definitely going to be going up.

Cary: Thanks, Aaron.

Carey Ford: Thanks, Aaron.

Okay, makes sense. Thanks, everyone. I'll turn it back.

Operator: Our next question comes from Keith Mackey with RBC Capital Markets. Your line is open.

Speaker #4: But it's a dynamic market. There's a lot of changes. So I'll stop short of giving you an exact number of what those disruptions might be.

Keith Mackey: Hi there. Thanks for taking my questions. Just maybe starting out on the international side, can you just give us a bit more color on the disruptions you faced in Q1 and the reactivation costs you faced in Q1? Maybe quantify those as much as you can for Q1 as well as heading into Q2. More broadly, Cary, how do you think about the international business now? You know, given everything that's happened over there, do you place a higher risk premium on deploying assets there? Just how do you think about that, you know, where that business fits within Precision over the longer term?

Our next question comes from Keith McKay with RBC Capital Markets. Your line is open.

Speaker #4: And then in terms of longer term, we said we want to grow the business, but we're not going to grow it in spite of returns.

Speaker #4: We really want to get the good returns on our capital. Your question about a discount rate or the required returns given the perceived increased risk level, it's a question for the broader market.

Hi there. Thanks for taking my questions. Uh, just maybe starting out on the international side. Can you just give us a bit more colour on the disruptions you faced in Q1? And the reactivation cost you faced in Q1? Maybe quantify those as much as you can for Q1, as well as heading into Q2. And then more broadly, Carey, how do you think about the international business now, you know, given everything that's happened over there.

Speaker #4: I don't know that I'm the best person or Precision is the best company to comment on that. But the environment has changed a bit.

Speaker #4: And there will be new variables in the models that come before deploying capital. And so we certainly think about that. And for the business, it's not optimal size from a scale standpoint, but seven rigs or eight rigs, as I mentioned, like they have sometime later this year or early next year, it's enough for us to generate meaningful EBITDA and meaningful cash flow.

Do you have a — do you place a higher risk premium on deploying assets there, and just how do you think about that? You know, where that business fits within Precision over the longer term?

Cary: Yeah. All fair questions. I think Dustin highlighted. I'll kind of go one by one there if I can remember them. On the rig reactivation cost, it was $2 million is what it cost us to reactivate the 1 rig in Saudi. It was higher than what we expected. The rig had been part of all of the rig suspensions in the kingdom. When we reactivated the rig, the requirements by the customer to get the rig up to spec were just much greater than what we thought and it was higher cost. Plus mobilizing the crews back in the country, it was just more than we thought. That was a one-time cost.

Carey Ford: Yeah. All fair questions. I think Dustin highlighted. I'll kind of go one by one there if I can remember them. On the rig reactivation cost, it was $2 million is what it cost us to reactivate the 1 rig in Saudi. It was higher than what we expected. The rig had been part of all of the rig suspensions in the kingdom. When we reactivated the rig, the requirements by the customer to get the rig up to spec were just much greater than what we thought and it was higher cost. Plus mobilizing the crews back in the country, it was just more than we thought. That was a one-time cost.

Yeah, so, uh, I'll, I'll, I'll fair questions, I think. Dustin highlighted to kind of go one by one there, if I can remember them. So, uh, on the rig reactivation cost, uh, it was $2 million US is what it cost us to reactivate the one rig in Saudi. It was higher than what we expected. The rig had been—if it was part of all of the rig suspensions in the Kingdom, uh, and when—

Speaker #4: So although it's not optimal size, I think we've got some optionality on whether to grow the business or plan to do something else strategic with it.

Speaker #8: No, thanks for that color, Carey. Appreciate it. Maybe just quickly on the two upgrades in Canada and just give us some more color on where those rigs are coming from potentially when they expect to go to work and just the scope of the upgrade required and whether you think that there's significantly more of these upgrades that you could potentially do or likely do.

Cary: What we're seeing right now in terms of disruption, it's getting crews in and out of the country, in and out of each country because of flight schedules and airport closures, you know, I'm sure you've read about plenty of the travel disruptions that this war has caused in the region. There's also some relatively minor. Well, I would say for us it's relatively minor. I think some of our, what you just call broader oilfield service industry peers, have reported lots of disruption related to supply chain in the region.

Carey Ford: What we're seeing right now in terms of disruption, it's getting crews in and out of the country, in and out of each country because of flight schedules and airport closures, you know, I'm sure you've read about plenty of the travel disruptions that this war has caused in the region. There's also some relatively minor. Well, I would say for us it's relatively minor. I think some of our, what you just call broader oilfield service industry peers, have reported lots of disruption related to supply chain in the region.

We reactivated the rig, uh, the requirements by the customer to get the rig up to spec, we're just much greater than what we thought in this, uh, higher Cost Plus mobilizing the cruise back into the country. It was, uh, just more than more than we thought, but that was a 1-time cost. Uh, what we're seeing right now in terms of disruption,

It's getting crews in and out of the country inn in and out of each country because of flight schedules and Airport closures. And you know, I'm sure you've read about plenty of the, um, travel disruptions that this war has caused in the region. There's also some uh, relatively minor

Speaker #8: Just given kind of where the Canadian market as well. Some comments around that would be helpful.

Cary: For us it's, you know, having to get parts from, you know, one part of the country that's far away, where parts are few, or one part of the country that's far away from where we're drilling when we used to get it very close to, where we're drilling. There's some logistical challenges. It's tough to quantify right now what that cost is gonna be. I think it's gonna be low single digits impact on profitability on those disruptions. It's a dynamic market. There's a lot of changes. I'll stop short of, you know, giving you an exact number of what those disruptions might be. In terms of longer term, we said we wanna grow the business, but we're not gonna grow it, in spite of returns.

Carey Ford: For us it's, you know, having to get parts from, you know, one part of the country that's far away, where parts are few, or one part of the country that's far away from where we're drilling when we used to get it very close to, where we're drilling. There's some logistical challenges. It's tough to quantify right now what that cost is gonna be. I think it's gonna be low single digits impact on profitability on those disruptions. It's a dynamic market. There's a lot of changes. I'll stop short of, you know, giving you an exact number of what those disruptions might be. In terms of longer term, we said we wanna grow the business, but we're not gonna grow it, in spite of returns.

Speaker #4: Yeah. So these rigs are going into multi-year contracts. The capital that we are spending on the rigs will be fully recouped within the term of the contract through either the day rate or an upfront payment from customers.

Speaker #4: So on the financial side, they're very attractive for us. I think for our customers, the performance of these rigs we're really excited about. I think it'll be creating a lot of value for our customers.

I would say for us, it's relatively minor. I think some of our which is called broader oil field service industry, peers have reported lots of disruptions related to supply chain in the region. But for us, it's uh, you know, having to get parts for, you know, 1 part of the country as far away where parts are are fuels and 1, part of the country, that's far away from where we're drilling when we used to get it, very close to uh where we're doing. So there's some logistical challenges, I it's tough to quantify uh, right now what that

Speaker #4: What we're doing is taking an ST1200. We are increasing the capacity pretty much all over the rig from hookload capacity, racking capacity, pumping capacity.

It's going to be, I think, low single digits impact on profitability from those disruptions. But it's a dynamic market; there are a lot of changes, so I'll stop short of...

You know, giving you an exact number of what those disruptions might be.

and then,

Speaker #4: And we're taking what we would call the rigs at from a spec standpoint that would be at the lowest end of our super triple 1200 class in Canada.

Cary: We really wanna get the good returns on our capital. Your question about a discount rate or the required returns given the, you know, perceived increased risk level, it's a question for the broader market. I don't know that I'm the best person or Precision's the best company to comment on that. The environment has changed a bit, and there will be new variables in the models that come before deploying capital. We certainly think about that. You know, for the business, it's not optimal size from a scale standpoint, but 7 rigs or 8 rigs, as I mentioned, we would likely have sometime later this year or early next year. It's enough for us to generate a meaningful EBITDA and meaningful cash flow.

Carey Ford: We really wanna get the good returns on our capital. Your question about a discount rate or the required returns given the, you know, perceived increased risk level, it's a question for the broader market. I don't know that I'm the best person or Precision's the best company to comment on that. The environment has changed a bit, and there will be new variables in the models that come before deploying capital. We certainly think about that. You know, for the business, it's not optimal size from a scale standpoint, but 7 rigs or 8 rigs, as I mentioned, we would likely have sometime later this year or early next year. It's enough for us to generate a meaningful EBITDA and meaningful cash flow.

Speaker #4: And upgrading them to where they would be at the leading edge of our fleet. And so these are opportunistic for our customers. They're core customers of ours.

Uh in terms of longer term, uh we said we want to grow the business but we're not going to grow it. Uh in spite of returns, we really want to get a good Returns on our Capital. Uh your your question about a discount range or the required returns given the

Speaker #4: They're important customers in the region. And we think that these are specific for they're drilling programs, but there may be more demand for these rigs.

Speaker #4: And we would happily meet that demand with these return metrics. But don't expect. To have a one-month type cadence. I think this is maybe a few-year over the next couple of years.

Speaker #4: Might be a good way to think about it. Now, Dustin, anything to add?

You know, perceived increase in risk level. Uh, it's a—it's a question for the broader market. Uh, I don't know that I'm the best version of Precision, the best company to—to comment on that. Uh, but the environment has changed a bit, and there will be, um, new variables in the models that, um, that come before deploying capital. And so we certainly think about that, and, you know, for the—for the business, it's not optimal size from a—from a scale standpoint. But 7 rigs or 8 rigs, as I mentioned with, like, they have, uh, sometime later this year or early next year,

Speaker #5: Yeah. No, I would just say more broadly speaking, Keith, we really like the fact that customers are showing a lot of enthusiasm around upfront payments.

Uh, it's enough for us to generate.

Cary: Although it's not optimal size, I think we've got some optionality on whether to grow the business or, you know, plan to do something else strategic with it.

Carey Ford: Although it's not optimal size, I think we've got some optionality on whether to grow the business or, you know, plan to do something else strategic with it.

Speaker #5: It's really take a little bit of the strain of the cash flow in the current year. These would include a portion of that. For return standpoint, we're very, very happy with it.

a meaningful leave of that and meaningful cash flow, uh, so although it's not optimal size, I think we, we've got some optionality on, uh, whether to grow the business or, or

You know, plan to do something else strategically.

Keith Mackey: No, thanks for that color, Cary. Appreciate it. Maybe just quickly on the two upgrades in Canada. Can you just give us some more color on where those rigs are coming from, potentially when they expect to go to work and just the scope of the upgrade, the upgrade required and whether you think that, you know, there's significantly more of these upgrades that you could potentially do or likely do, just given kind of where the Canadian market is well. Some comments around that would be helpful.

Speaker #5: And the margin increases that we'll see as Carey mentioned, they're incredibly strategic. As far as the location and the core customers, we'll deepen our relationship.

Speaker #5: And as it makes our operating capabilities better, I made that comment earlier in an earlier question about how we've been able to sustain our presence as a price leader in Canada.

Speaker #5: And to further differentiate our offer will be a core way we sustain that going forward. One other point I'd make these upgrades would be delivered one in Q3 and one would be delivered later in the year in Q4.

Cary: These rigs are going into multi-year contracts. The capital that we are spending on the rigs will be fully recouped within the term of the contract through the, either the dayrate or an upfront payment from customers. On the financial side, they're very attractive for us. I think for our customers, the performance of these rigs, we're really excited about. I think we've created a lot of value for our customers. What we're doing is taking an ST-1200. We're increasing the capacity pretty much all over the rig from hook load capacity, racking capacity, pumping capacity.

Speaker #5: So for the financial pull-through, you would see portions of that in 2026.

No, thank thanks for that color Carrie. Appreciate it. Um maybe just quickly on the 2 up in Canada. Just give us some more color on where those rigs are coming from potentially when they expect to go to work and and just the, the scope of the upgrade, the upgrade required and, and, and whether you think that, you know, there's um, significantly more of these upgrades that you could potentially do, or likely do just given kind of where the Canadian Market as well. Um, some some comments around that would be helpful.

Carey Ford: These rigs are going into multi-year contracts. The capital that we are spending on the rigs will be fully recouped within the term of the contract through the, either the dayrate or an upfront payment from customers. On the financial side, they're very attractive for us. I think for our customers, the performance of these rigs, we're really excited about. I think we've created a lot of value for our customers. What we're doing is taking an ST-1200. We're increasing the capacity pretty much all over the rig from hook load capacity, racking capacity, pumping capacity.

Speaker #8: Understood. Thanks very much.

Yes, so these rigs are going into multi-year contracts. Uh, the capital that we—

Speaker #5: Take care.

Speaker #4: Thanks, Keith.

Speaker #1: Our next question comes from John Daniel with Daniel Energy Partners. Your line is open.

Speaker #6: Hey, Carey. Dustin, team. Carey, have you had any customers start asking you about 2027 yet?

Speaker #5: Some of the rig contract discussions that we're having that we are having are one year or more. So they're going into 2027. So I can't give you concrete examples, but it's possible.

Within the term of the contract, through either the day rate or an upfront payment and customers. So, on the financial side, they're very attractive for us. I think for our customers, the performance of these rigs we're really excited about. I think we created a lot of value for our customers. What we're doing is taking an ST.

Cary: We're taking what we would call the rigs at from a spec standpoint, that would be at the lowest end of our Super Triple 1200 class in Canada and upgrading them to where they would be at the leading edge of our fleet. These are opportunistic for our customers. They're core customers of ours. They're important customers in the region. We think that these are specific for their drilling programs. There may be more demand for these rigs, and we would happily meet that demand with these return metrics. Don't expect to have, you know, a one-a-month type cadence. I think this is, you know, maybe a few a year over the next couple of years, might be a good way to think about it.

Carey Ford: We're taking what we would call the rigs at from a spec standpoint, that would be at the lowest end of our Super Triple 1200 class in Canada and upgrading them to where they would be at the leading edge of our fleet. These are opportunistic for our customers. They're core customers of ours. They're important customers in the region. We think that these are specific for their drilling programs. There may be more demand for these rigs, and we would happily meet that demand with these return metrics. Don't expect to have, you know, a one-a-month type cadence. I think this is, you know, maybe a few a year over the next couple of years, might be a good way to think about it.

Speaker #6: No, okay. I just didn't know if anyone what they're telling you in terms of potential needs next year versus where they are today. But I'm guessing the answer is no.

So, 1,200, we are increasing the capacity pretty much all over the rig, from bookflow capacity, right? Racking capacity, pumping capacity, and we're taking what we would call the rigs, from a spec standpoint, that would be—

At the low end of our Super Triple 12,200 class in Canada.

Speaker #5: I don't know an answer. Like I said, these customer conversations have really ramped up here in the last two or three weeks. And in the past couple of days, we may have had some conversations that I'm not aware of.

And upgrading them to where they would be at the leading edge of our fleet. And so, uh, these are

Speaker #6: Fair enough. That's cool. Just so I get the number straight here, your US count is 35 today?

Opportunistic for our customers, their core customers of ours, of their important customers in the region. And, um, we think that these are specific for their drilling programs, but there may be more demand for these rigs. Uh, and we would happily meet that demand with these return metrics.

Speaker #5: It'll be 35 next week. 32 today.

Speaker #6: 35 next week. And where did you say you're going to exit the quarter? The expected number?

But don't expect to have, you know, a one-a-month type of cadence. I think this is a, you know, maybe a few over the next couple of years. Um,

Cary: Now, Dustin, anything to add?

Carey Ford: Now, Dustin, anything to add?

Speaker #5: High 30s. 38 or 39 rigs.

Dustin: Yeah. No, I would just say more broadly speaking, Keith, like we really like the fact that customers are showing a lot of enthusiasm around upfront payments to really take a little bit of the strain of the cash flow in the current year. These would include a portion of that. From a return standpoint, we're very, very happy with it and the margin increases that we'll see. As Cary mentioned, they're incredibly strategic as far as the location and the core customers, we're deep in a relationship. You know, as it makes our operating capabilities better, you know, I made that comment earlier in an earlier question about how we've been able to sustain our presence as a price leader in Canada.

Dustin Honing: Yeah. No, I would just say more broadly speaking, Keith, like we really like the fact that customers are showing a lot of enthusiasm around upfront payments to really take a little bit of the strain of the cash flow in the current year. These would include a portion of that. From a return standpoint, we're very, very happy with it and the margin increases that we'll see. As Cary mentioned, they're incredibly strategic as far as the location and the core customers, we're deep in a relationship. You know, as it makes our operating capabilities better, you know, I made that comment earlier in an earlier question about how we've been able to sustain our presence as a price leader in Canada.

Speaker #6: 38, 39.

Speaker #5: And John, just yeah, just to make sure you heard our comments, that's really just kind of the normal churn. That's not really commodity price-driven.

Speaker #6: Sure.

Speaker #5: Okay.

Speaker #6: No, that's right. Yeah, yeah. But I'm just I'm getting old, Carey. I'm trying to it's hard to follow numbers. But you got 15 or so rigs that could come back to work.

Speaker #6: Would it be unreasonable for someone to assume that you could be adding three to four rigs a quarter through the end of the year?

Speaker #5: I think it's probably reasonable to assume that we're going to be adding more than that. More per quarter. Yeah. I mean, I think yeah.

Dustin: To further differentiate our offer would be a core way we sustain that going forward. One other point I'd make, these upgrades would be delivered one in Q3 and one would be delivered later in the year in Q4. For the financial pull-through, you would see portions of that in 2026.

Dustin Honing: To further differentiate our offer would be a core way we sustain that going forward. One other point I'd make, these upgrades would be delivered one in Q3 and one would be delivered later in the year in Q4. For the financial pull-through, you would see portions of that in 2026.

Speaker #6: More per quarter. That's fine. Okay. Times are good. Okay. All right, guys. Thanks a lot.

Speaker #5: Okay. Thanks, John.

Speaker #1: Our next question comes from John Gibson with BMO Capital Markets. Your line is open.

Keith Mackey: Understood. Thanks very much.

Might be a good way to think about it now. Dustin. Anything that yeah, no I would, I would just say more, broadly, speaking Keith. Like we, we really like the fact that customers are showing a lot of enthusiasm around, upfront payments to really take a little bit of the strain of the cash flow and the current year, um, these would include a portion of that for a return standpoint. We're very, very happy with it and the margin increases that we'll see. Um, as Carrie mentioned they're incredibly strategic, um, as far as the location and the core customers move deep in a relationship and, you know, as a as a operating capabilities that are you know I made that comment earlier in an earlier question about how we've been able to sustain our presence as a price leader in Canada? And to further differentiate your offer will be a core way. We sustain that going forward. Um, 1 other point I'd make, um, these upgrades would be delivered 1 in Q3 and 1 would be delivered later in the year in Q4. So for the financial pull through um you would see portions of that in 2026.

Speaker #8: Morning or afternoon, wherever you are. Just had one you talked a lot about US pricing morning. Could you talk about pricing in Canada? You kind of alluded to that the doubles market is still oversupplied, but it seems like there's incremental demand.

Cary: Thank you.

Carey Ford: Thank you.

Dustin: Thanks, Keith.

Dustin Honing: Thanks, Keith.

Understood. Thanks very much.

Take care.

Operator: Our next question comes from John Daniel with Daniel Energy Partners. Your line is open.

Our next question comes from John Daniel with Daniel Energy Partners, your line is open.

John Daniel: Cary, Dustin, team. Cary, have you had any customers start asking you about 2027 yet?

Speaker #8: I'm just wondering are we nearing an inflection for pricing on maybe some of the lower-class rigs, or is that a little ways out? And do you see that being possible based on the commodity price environment and demand from customers?

Sherry, uh, Dustin team. Um Carrie have you had any customers start asking you about 2027 yet?

Cary: Some of the rig contract discussions that we are having are 1 year or more, they're going into 2027. I can't give you concrete examples, but it's possible.

Carey Ford: Some of the rig contract discussions that we are having are 1 year or more, they're going into 2027. I can't give you concrete examples, but it's possible.

Speaker #5: Yeah. I would say historically, we have seen in higher commodity price environments that all rig-class pricing goes up. But I would say at the field level and the customer conversations, we are not seeing an indication that that rig-class is moving up in price.

Uh, some of the rigged contract discussions that we're having go that we are having are are 1 year or more, so they're going into 2027.

uh,

So, I—I can't, I can't give you concrete examples, but, but it's possible.

John Daniel: No. Okay. I just didn't know what they're telling you in terms of potential needs next year versus where they are today. I'm guessing the answer is no.

No, okay. I just didn't have any—what they're telling in terms of...

Cary: I don't know an answer. Like I said, these customer conversations.

Potential needs next year versus where they are today, but I'm guessing the answer is no.

Speaker #5: Today.

Carey Ford: I don't know an answer. Like I said, these customer conversations.

Speaker #8: Got it. Appreciate the responses. I'll turn it back.

John Daniel: Okay

Cary: ... they've really ramped up here in the last two or three weeks. In the past couple of days.

Carey Ford: ... they've really ramped up here in the last two or three weeks. In the past couple of days.

Speaker #5: Thanks, John.

Speaker #1: And I'm not showing any further questions at this time. I'd like to turn the call back to Lavonne for any further remarks.

John Daniel: Right

Cary: We may have had some conversations that I'm not aware of.

Carey Ford: We may have had some conversations that I'm not aware of.

John Daniel: Yeah. That's cool. Just so I get the numbers straight here, your US count Is it 35 today?

I don't—I don't know an answer. Like I said, these uh, customer conversations, they really ramped up here in the last two or three weeks, and in the past couple of days we may have had some conversations that I'm not aware of.

Speaker #9: Thank you. As a reminder, our Q1 financial statements and MD&A are now available on our website. Thanks to our research analysts for their questions.

Cary: It'll be 35 next week. 32 today.

Carey Ford: It'll be 35 next week. 32 today.

Yeah, that's cool. Um, just so I get the number straight here. Uh, your US count is 30. Is it 35?

Speaker #9: Should other participants have a question, please reach out to either myself or Patrick Tang in the investor relations department. Thank you very much, and have a good day.

John Daniel: Thirty-five next week. Where did you say you're gonna exit the quarter, the expected number?

Cary: High 30s.

Carey Ford: High 30s.

Speaker #1: Thank you, ladies and gentlemen. So that's conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.

John Daniel: Thirty-eight.

Cary: 30, 38 to 39 rigs.

Carey Ford: 30, 38 to 39 rigs.

John Daniel: 38, 39.

That'll be 35. Next week, 30. 332 today. 35 next week. And did you—where did you say? You're going to exit the quarter? The expected number? Hi. Hi. 30. 30, 308 to 39 rigs.

Cary: John, I.

Carey Ford: John, I.

John Daniel: Fifteen-

Cary: Just. Yeah. Just to make sure you heard our comments. That's really just kind of the normal churn. That's not really commodity price driven.

Carey Ford: Just. Yeah. Just to make sure you heard our comments. That's really just kind of the normal churn. That's not really commodity price driven.

John Daniel: Sure.

Cary: Okay.

Carey Ford: Okay.

John Daniel: No, that's right. Yeah, yeah. I'm getting old, Cary. It's hard to follow the numbers. You got 15 or so rigs that could come back to work. Would it be unreasonable for someone to assume that you could be adding three to four rigs a quarter through the end of the year?

339 and John. I just yeah just just just to make sure we you heard our comments. That's really just kind of the normal turn. That's not really a commodity price, even sure. Okay.

Cary: I think it's probably reasonable to assume that we're gonna be adding more than that, more per quarter.

No, that's right. Yeah, yeah. I'm just I'm just I'm I'm getting old Carrie. I'm trying to it's hard to follow the numbers. Um, but you got 15 or so rigs that could come back to work, is it, would it be unreasonable for someone to assume that you could be adding 3 to 4, rigs a quarter through the end of the year?

Carey Ford: I think it's probably reasonable to assume that we're gonna be adding more than that, more per quarter.

John Daniel: More than four.

Cary: Yeah. I mean, I think. Yeah.

Carey Ford: Yeah. I mean, I think. Yeah.

John Daniel: More per quarter. That's fine. Okay. Times are good. Okay. All right, guys. Thanks a lot.

Uh, I think it's probably reasonable to assume that we're going to be adding more than that. Um, more than—yeah, I think.

More per quarter. That's fine. Okay.

Cary: Okay. Thanks, John.

Carey Ford: Okay. Thanks, John.

Times are good. Okay. All right, guys, thanks a lot.

Operator: Our next question comes from John Gibson with BMO Capital Markets. Your line is open.

Thanks John.

Our next question comes from John Gibson with BMO Capital Markets. Your line is open.

John Gibson: Morning or afternoon, wherever you are. Just had one. You talked a lot about US pricing mornings. You talked about pricing in Canada. You kind of alluded to that the doubles market is still oversupplied, but it seems like there's incremental demand. I'm just wondering, are we nearing an inflection for pricing on maybe some of the lower class rigs, or is that a little ways out? Do you see that, you know, being possible based on the commodity price environment and demand from customers?

Uh, morning or afternoon, wherever you are. Um, just had one. You talked a lot about U.S. pricing mornings. Can you talk about pricing in Canada?

Kind of alluded to that—the doubles market is still oversupplied, but it seems like there’s incremental demand. I’m just wondering.

Are we nearing an inflection for pricing on maybe some of the lower class rigs, or is that, uh,

Cary: Yeah. I would say historically, we have seen in higher commodity price environments that all rig class pricing goes up. I would say at the field level in the customer conversations, we are not seeing any indication that that rig class is moving up in price today.

Carey Ford: Yeah. I would say historically, we have seen in higher commodity price environments that all rig class pricing goes up. I would say at the field level in the customer conversations, we are not seeing any indication that that rig class is moving up in price today.

see that, you know, being possible based on the commodity price environment and demand from customers

Yeah, I would say, historically, we have seen in a higher commodity price environment that all rig class pricing goes up. Um, but I would say...

At the field level and in customer conversations, we are not seeing any indication that that reclass is moving up in price.

Today.

John Gibson: Got it. Appreciate the responses. I'll turn it back.

Cary: Thanks, John.

Carey Ford: Thanks, John.

Got it. Um, appreciate the responses. I'll turn it back.

Operator: I'm not showing any further questions at this time. I'd like to turn the call back to Lavonne for any further remarks.

Lavonne: Thank you. As a reminder, our Q1 financial statements and MD&A are now available on our website. Thanks to our research analysts for their questions. Should other participants have a question, please reach out to either myself or Patrick Tang in the investor relations department. Thank you very much and have a good day.

Lavonne Zdunich: Thank you. As a reminder, our Q1 financial statements and MD&A are now available on our website. Thanks to our research analysts for their questions. Should other participants have a question, please reach out to either myself or Patrick Tang in the investor relations department. Thank you very much and have a good day.

No, I'm not showing any further questions at this time. I'd like to turn the call back to Levon for any further remarks.

Operator: Thank you, ladies and gentlemen. This concludes today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.

Thank you. As a reminder, our Q1 financial statements and MD&A are now available on our website. Thanks to our research analysts for their questions. Should either participant have a question, please reach out to either myself or Patrick Tang in the investor relations department. Thank you very much, and have a good day.

Thank you, ladies and gentlemen. That concludes today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

Q1 2026 Precision Drilling Earnings Call

Request DemoDemo

Precision Drilling

Earnings