Despite persistent market volatility and a softening U.S. drilling landscape, Precision Drilling Corporation (TSX:PD; NYSE:PDS) entered 2025 with steady financial performance, operational strength in Canada, and a continued focus on shareholder returns.

🎯 Financial Performance: Stability Amid Headwinds

In Q1 2025, Precision reported:

$496 million in revenue, down 6% from Q1 2024, primarily due to lower U.S. activity.
Adjusted EBITDA of $137 million, with a margin of 28%—on par with last year.
$35 million in net earnings, marking the 11th straight quarter of profitability.
$63 million in operating cash flow, which funded $31 million in share buybacks and $17 million in debt reduction.

“I am pleased with Precision’s first quarter financial and operational results, and particularly with the efforts of the Precision team as we manage our way through a period of unusual volatility and market uncertainty,” said CEO Kevin Neveu.

The company also announced a $25 million cut to its 2025 capital budget, now set at $200 million, reflecting a conservative approach to market dynamics.

🛢️ Operational Highlights: Canadian Rigs Steady, U.S. Repositions

In Canada, Precision averaged 74 active rigs, up slightly from 73 in Q1 2024. Revenue per utilization day held steady at $35,601.
In the U.S., average active rigs dropped to 30, but recent additions brought the April count to 34, targeting natural gas plays with long-term LNG potential.
International operations remained stable with 8 rigs under long-term contracts, contributing predictable cash flows.

“With initial Liquefied Natural Gas (LNG) exports beginning shortly in Canada and significant LNG export capacity expansion underway in the U.S., we believe our market positioning for these increasing LNG opportunities is constructive,” Neveu added.

📉 Managing Volatility: Cost Discipline and Capital Allocation

Precision is tightening its belt in response to softer North American activity, particularly in the U.S. market. The company has:

Trimmed 2025 capital spending to mitigate uncertainty.
Reduced fixed costs by $10 million annually, including the exit of its North Dakota well-servicing business.
Maintained a capital return strategy targeting $100 million in debt reduction and allocating 35% to 45% of free cash flow to share repurchases.

“Tightly controlling all aspects of our business… is a cornerstone of Precision’s business model,” said Neveu.

“We are reducing our 2025 capital spending by $25 million to $200 million to mitigate increased market uncertainty and a potential reduction in customer demand.”

🔭 Outlook: LNG Expansion and Stable Canadian Activity

Looking forward, the company is cautiously optimistic. Canadian drilling is expected to remain elevated in the first half of 2025, supported by:

The Trans Mountain pipeline expansion, now operational.
The imminent startup of LNG Canada, opening tidewater access for natural gas exports.

“We expect the traditional spring breakup period this year to have a historically small impact… strong demand for our growing fleet of pad-capable rigs should allow 45 to 48 rigs to continue operating,” noted Neveu.

In the U.S., LNG-driven natural gas demand is helping offset a weaker oil environment. Precision is strategically positioning its fleet to capitalize on 13 Bcf/d of LNG export capacity coming online over the next five years.

🧠 Final Word

Precision Drilling is navigating 2025 with a clear focus: maintain capital discipline, scale with LNG growth, and maximize shareholder returns. With a highly utilized Canadian fleet, emerging U.S. gas activity, and long-term international contracts, the company is weathering uncertainty with resilience and foresight.

“With a predominantly variable cost business and low debt levels… Precision is better positioned than any time in the past decade to navigate uncertainty while simultaneously creating shareholder value,” concluded Neveu.