Precision Drilling used its second quarter 2026 earnings call to deliver one of its most optimistic outlooks for the U.S. land drilling market in recent years. While short-term profitability has been impacted by the cost of reactivating idle rigs, management made it clear that the underlying business is strengthening, customer demand is improving, and margins are expected to recover through the second half of 2026.
The company’s U.S. activity has increased rapidly over the past several months. Precision exited the second quarter with 42 active rigs, up from just 32 rigs in April, and expects to average low-40 active rigs during the third quarter, its highest activity level since 2023. Management noted that much of this growth is being driven by oil-focused basins, particularly the Permian, where customers are expanding drilling programs and requesting additional rigs after successful deployments.
Although U.S. operating margins declined during the quarter, executives emphasized that the pressure is temporary. Precision completed seven major rig reactivations during Q2 and expects approximately five additional reactivations in Q3. These activations require investments in crew recruitment, training, rig recertification, and technology deployment, adding roughly US$1,500 to US$2,000 per operating day in costs. Management described these expenses as investments that position the fleet for stronger profitability rather than signs of market weakness.
Looking ahead, Precision expects U.S. daily operating margins to improve from US$7,000–8,000 per day in Q3 to approximately US$10,000 per day in Q4, with further improvement anticipated in 2027 as reactivation activity slows and pricing continues to strengthen. The company also reported increasing success in negotiating higher day rates, with some contracts increasing by as much as US$5,000 per day, while the broader fleet is seeing pricing improvements of approximately US$500 to US$1,000 per day each quarter.
Technology continues to be a key competitive advantage. Precision highlighted customer demand for its digital drilling platform, automation capabilities, robotics, and remote operations, noting that several Permian customers have already requested second rigs after seeing operational performance. The company also stated that it is winning business from competitors and focusing on strategic customers that value safety, efficiency, and technology rather than simply pursuing higher rig counts.
Precision Drilling U.S. Activity by Basin (2026)
| Play / Basin | Wells Drilled |
|---|---|
| DJ Basin | 163 |
| Permian Basin | 140 |
| Appalachia (Marcellus/Utica) | 60 |
| Powder River Basin | 38 |
| Eagle Ford | 22 |
| Rockies (Greater Green River) | 15 |
| Williston Basin (Bakken) | 2 |
| Other / Unclassified | 211 |
The well activity data shows that Precision’s U.S. operations are concentrated in the DJ Basin and Permian Basin, which together account for nearly half of all wells drilled during 2026. This aligns closely with management’s comments that oil-directed drilling, particularly in the Permian, is driving the company’s growth outlook.
Top U.S. Customers by Wells Drilled (2026)
| Account | Wells |
|---|---|
| OXY USA Inc. | 112 |
| Summit Petroleum LLC | 43 |
| Bison Oil & Gas IV, LLC | 35 |
| Hibernia Resources III LLC | 34 |
| VTX Energy Partners, LLC | 26 |
The customer mix also supports Precision’s strategy of deepening relationships with large operators. OXY USA alone accounts for more than 100 wells drilled during 2026, while the remaining top operators represent a diversified mix of private and public companies across the Permian, DJ Basin, and other core U.S. plays.
Industry Impact
Precision Drilling’s outlook suggests that the U.S. land drilling market is transitioning from stabilization to growth. While near-term costs associated with bringing rigs back into service are weighing on margins, rising rig utilization, stronger pricing, expanding customer relationships, and continued investment in drilling technology point to improving profitability through late 2026 and into 2027. For oilfield service companies, equipment suppliers, and operators, the company’s comments reinforce that demand is strengthening in the Permian and other core U.S. basins, with technology and operational performance becoming increasingly important competitive differentiators.
Author: phinds