In a cautious drilling environment, rig upgrades have quietly become one of the most important strategic levers in land drilling. During its Q3 2025 earnings call, Precision Drilling Corporation was unusually clear: rig upgrades are not discretionary spend — they are the highest-return use of capital in the business.
This wasn’t marketing language. It was a capital allocation thesis backed by contracts, utilization, and customer demand.
Rig upgrades are the highest-return capital decision
Precision’s management framed rig upgrades as superior to every other capital option, including M&A. The reason is simple: upgrades are almost always contract-backed. In many cases, customers provide upfront payments or long-term commitments, locking in returns before capital is deployed. Precision Drilling Corporation …
Unlike speculative fleet expansion, upgrades are demand-driven. Precision is not betting on future activity — it is responding to confirmed drilling programs that require higher-spec equipment.
27 major upgrades in 2025 — all demand-led
In 2025, Precision will complete 27 major rig upgrades, prompting the company to raise its capital budget from $240 million to $260 million, specifically to support five additional contracted upgrades. Precision Drilling Corporation …
What matters is not the number — it’s the structure. Every upgrade is either:
- Backed by a customer contract, or
- Supported by upfront customer payments
This ensures capital discipline while materially improving fleet capability.
Where the upgrades are happening — and why
Precision emphasized that upgrades are being directed to basins with structural activity growth, not cyclical rebounds.
Canada
- Super Triple rigs supporting Montney development and LNG-linked gas demand
- Heavy oil pad conversions in Clearwater, enabling year-round drilling and adding roughly 100 incremental utilization days per rig
United States
- Gas-weighted basins including the Marcellus and Haynesville, where longer laterals and higher torque requirements are becoming standard
- Select upgrades in the Permian and Rockies for high-torque and long-reach applications Precision Drilling Corporation …
The common thread: well complexity is increasing, and older rigs simply cannot deliver the performance operators now require.
Longer laterals are driving the upgrade cycle
Management highlighted wells approaching 30,000 feet, including record-setting footage drilled for major customers in the Marcellus and Haynesville. These well designs demand:
- Higher torque
- Faster tripping
- Pad-optimized configurations
- Greater mechanical reliability
Rig upgrades are no longer optional enhancements — they are prerequisites for participating in modern drilling programs. Precision Drilling Corporation …
Fast upgrades, minimal downtime
A key advantage for Precision is execution speed. Thanks to in-house upgrade facilities in Nisku and Houston, most upgrades are completed quickly:
- Minor in-basin upgrades: days to weeks
- Super Triple upgrades: ~2–3 months
- Heavy oil pad conversions: ~3–4 months
There are no six- to nine-month sidelining events, allowing Precision to modernize its fleet while maintaining high utilization. Precision Drilling Corporation …
Looking ahead: upgrades continue into 2026
While Precision stopped short of giving a 2026 upgrade count, management was clear that upgrade activity will continue. As gas demand is supported by LNG exports and gas-fired power generation, and as wells continue getting longer and more complex, customer demand for higher-spec rigs is not expected to fade. Precision Drilling Corporation …
Final takeaway
Precision Drilling’s rig upgrade strategy is not about growth for growth’s sake. It is about locking in high-return capital, aligning with customer demand, and future-proofing the fleet in gas-weighted and heavy oil basins. In today’s market, rig upgrades aren’t a cycle call — they’re a competitive necessity.
