Precision Drilling Q3 2026 Earnings Call Transcript

Precision Drilling (TSX:PD) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://edge.media-server.com/mmc/p/x59h75bk

Summary

Precision Drilling Corporation reported a 15% year-over-year increase in revenues for Q3 2026, reaching $532 million, driven by stronger North American drilling activity and higher U.S. day rates.

The company continues to make strategic investments in its fleet, with 25 North American rig upgrades planned, aligning with customer demand and supporting long-term growth.

Q3 net earnings were $21 million, a significant improvement from a net loss of $7 million in the same quarter of 2025, and adjusted EBITDA was $125 million.

Capital expenditures for the quarter were $82 million, with $31 million allocated towards share repurchases as part of the capital return commitments.

Precision expects continued growth in Q4 and into 2027, with a focus on margin expansion in the U.S. and robust demand for its Canadian Super Series rigs.

Management highlighted the importance of technology, particularly the Alpha and Evergreen platforms, in enhancing operational efficiency and customer satisfaction.

The company’s liquidity position remains strong, with over $460 million at the end of Q3, and it is on target to achieve a net debt to adjusted EBITDA ratio below 1x.

Precision is seeing increasing customer interest in longer-term contracts, particularly in the U.S., and anticipates improved activity levels in 2027.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the Precision Drilling Corporation 2026 Third Quarter Results conference call. I would like to turn the conference over to Lavon Zduenick, Director of Investor Relations. Please go ahead.

Lavon Zduenick (Director of Investor Relations)

Welcome everyone to Precision’s third quarter earnings conference call and webcast. Today I’m joined by Carey Ford, our President and CEO, and Dustin Honing, CFO. Yesterday Precision reported solid third quarter results, which Dustin will review, followed by operational and outlook commentary from Carey. Once we have finished our prepared comments, we will open the call to questions. Some of our comments today will refer to non-IFRS financial measures and will include forward-looking statements, which are subject to a number of risks and uncertainties. Please see our news release and other regulatory filings for more information on financial measures, forward-looking statements, and risk factors. As a reminder, we express our financial results in Canadian dollars unless otherwise indicated. With that, I will pass it over to Carey to begin.

Carey Ford (President and CEO)

Thank you, Lavon. Good morning and good afternoon, everyone. Before I hand the call over to Dustin, I’d like to briefly frame the quarter for our listeners and highlight our progress against our 2026 priorities. Precision delivered differentiated North American revenue growth across the drilling and CMP service lines and continued to make strategic investments in our fleet while meeting our capital return commitments. In short is what we said we would do in our press release.

We guided to 25 North American rig upgrades this year. The contracted upgrades remain the best opportunity to deploy capital and create short- and long-term shareholder value. Upgrades have attractive contracted returns, improve fleet capabilities, and align our service delivery with longer-term customer programs. These fleet investments and service delivery by Precision crews, supported by technology and a growing contract book, position our business for continued growth in Q4 and create an improved platform for customer service delivery and cash flow generation in 2027.

With that, I’ll turn it over to Dustin.

Dustin Honing (Vice President, Operations Finance)

Thank you, Carey, and good morning and good afternoon for those calling in different locations. For the third quarter of 2026, revenues increased 15% from the prior year to $532 million, driven by stronger drilling activity levels in North America and higher average U.S. day rates, partially offset by lower international results. Our operating expenses were impacted by a reactivation of six U.S. rigs during the quarter in response to growing oil-driven demand in the Lower 48.

Q3 results also included higher international operating costs from ongoing regional tensions in the Middle East. Q3 adjusted EBITDA was $125 million, which equates to approximately $133 million before share-based compensation expense, compared to prior year EBITDA of $118 million, or approximately $129 million before share-based compensation expense. Net earnings were $21 million compared to a net loss of $7 million in the third quarter of 2025. Precision generated $71 million of cash from operations compared with $76 million in the third quarter of 2025.

As previously communicated, cash flow was impacted by large non-cash working capital build associated with growing activity levels in Canada and the U.S. in combination with our semi-annual interest payment. Capital expenditures were $82 million, comprised of $58 million for maintenance and infrastructure and $24 million for upgrades. These investments were made in step with our shareholder returns program as we allocated $31 million towards share repurchases during the quarter.

Moving on to our operating segments: In Canada, Q3 drilling activity averaged 73 active rigs, an increase of 10 rigs from the third quarter of 2025. Our reported Q3 daily operating margins were $12,817 compared with $13,007 in the third quarter 2025. Both activity and margins were in line with prior guidance during the quarter. Robust heavy oil activity led to increased utilization of our Super Single suite, resulting in a higher proportion of days from this rig class.

Our sustained year-over-year activity growth throughout 2026 continues to demonstrate the value of our differentiated positioning in both Canada’s heavy oil and unconventional natural gas condensate basins. In the U.S., we averaged 43 active rigs, an increase of seven rigs from the third quarter of 2025. Our daily operating margins were US $7,653 compared to US $8,700 in the third quarter of 2025, also within our prior guidance range. Although revenue per day increased, margins were notably impacted by reactivating six rigs in the quarter at a cost of US $2,125 per utilization day. Looking ahead, our focus remains on demonstrating notable margin expansion in Q4 and into 2027.

Internationally, Precision averaged seven active rigs, relatively in line with prior year Q3 activity levels. International day rates averaged US $46,304, a decrease of 14% from prior year Q3. During the quarter, rig margins were unfavorably impacted by elevated operating expenses in the Middle East and rig mix, with one of our higher-performing rigs in Kuwait being idled this year. That rig is expected to return to work in mid-2027 under a five-year contract.

In our Completion and Production Services segment, adjusted EBITDA increased 10% to $21 million. Strong fundamentals in the Canadian market again drove increased well servicing demand, primarily in the heavy oil regions. Our growing rentals business is also delivering incremental year-over-year revenue and EBITDA while strengthening our differentiated full-service offering to our customers. Moving on to forward guidance, I’ll begin with our expectations for the fourth quarter. Starting in Canada, we continue to see robust demand for our Super Series rigs and expect our Super Triple and Super Single fleets to operate at near full utilization through the winter drilling season. For the fourth quarter, we expect average active rig count to be in the low 70s, which compares to 66 average rigs working prior to Q4. Keep in mind that Canadian Q4 activity levels are impacted by temporary shutdowns over the Christmas season.

Daily operating margins are expected to range between $13,500 and $14,500, consistent with fourth quarter of 2025. In the U.S., our fourth quarter average rig count is expected to be in the low- to mid-40s. Margin expansion remains a critical deliverable for the business following the completed reactivations in the second and third quarters. For Q4, we expect daily operating margins to climb between US $9,500 and US $10,500, a meaningful increase sequentially from Q3.

Internationally, we expect to continue operating seven rigs through Q4, with elevated operating costs in the quarter. Our CMP business continues to generate strong free cash flow driven by our well servicing and surface rental business lines. For Q4, we expect EBITDA to remain in line with prior year levels. Moving to guidance for the full year 2026, our capital expenditures budget increased to a range between $275 million and $285 million. Our increase towards the lower end of the range supports committed long-lead purchases for projects to be completed next year. The higher end of the range provides for a pending upgrade opportunity which would have multiple rigs contracted through 2029 for a large Canadian producer. Full-year depreciation is expected to be $325 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%. Precision expects business cash taxes to remain low in 2026, with cash taxes slightly increasing in Canada in 2027. There are no updates regarding the CRA dispute, and we are submitting our formal objection in Q4. For 2026, we expect SG&A to be $100 million before share-based compensation expense, inclusive of one-time restructuring costs incurred this year. Share-based compensation guidance for the year ranges between $25 million and $50 million, assuming a share price between $100 and $150 and a 1x multiplier.

The multiplier can range between 0x and 2x, which can either reduce or increase our guidance range. We enter the fourth quarter with over $460 million in total liquidity and are closing in on our long-term target of net debt to adjusted EBITDA ratio below 1x. For the first nine months of 2026, we’ve reduced debt by $75 million and repurchased $47 million worth of shares. Despite the higher working capital build that is expected this year, we remain committed to reaching our $100 million debt reduction target for 2026 while continuing to repurchase shares in the fourth quarter.

With that, I’ll pass it over to

Carey Ford (President and CEO)

Thank you, Dustin. For my prepared remarks, I will cover three areas. First, the early results of our US market strategy. Second, the improving outlook for Precision in the Canadian market. And third, how our technology offering is critical to delivering for our customers. Before I get to those topics, I want to acknowledge our field crews and leadership in the Middle East who are working in a dynamic environment and keeping people safe. They’re delivering for our customers in the region and for the families of all Precision employees. Thank you.

Moving on to the US, where Precision’s strategic approach to strengthening the business is producing results, with an average of 43 active rigs during the quarter compared to 35 active in Q2. Our team has led field performance with well-trained crews supported by our Alpha and Clarity platforms, delivering critical customer KPIs across the fleet. Precision’s field performance and successful reactivations have solidified customer relationships, resulting in steadier activity and an increasing number of customers with multiple Precision rigs.

In no basin is this more apparent than the Permian, where we are currently running 16 rigs compared to 8 rigs one year ago. Our team has delivered this increase by building on a high-performance track record, onboarding new customers, upgrading rigs with customer contracts, and deepening customer relationships. I am thrilled with the reputation and business Precision is building in West Texas through the relentless efforts of our sales, operations, technology, and operations support teams, and I’m excited for the future growth in this important region.

As discussed last quarter, we have experienced some softness in the Northeast, but multiple rigs are firing up in that region over the next few months, which will drive activity growth. We expect our rig count to range for the US in the low to mid-40s for the remainder of the year and are experiencing an elevated number of requests for rig startups early next year, supporting an improved activity outlook for 2027. As we have projected on previous conference calls, rig reactivations have slowed, fixed cost absorption has improved, and we now expect Q4 margins to reach the highest level in the past two years, providing a foundation for steadier and potentially growing profitability in the US next year.

Second, I would like to discuss the outlook in the Canadian market. The positive news flow from the Canadian energy industry has been head-spinning, and despite continued wet conditions in the summer and into late October, as well as higher crude differentials and weaker AECO gas prices, Precision activity remains at multi-year highs across both the drilling and completion and production services businesses. Our Montney activity can be characterized as steady year over year, while our super single rigs servicing the heavy oil markets had Q3 utilization up 18% year over year, reflecting the high performance of this rig class and our customers’ favorable economics.

For those listeners who do not follow the Canadian market closely, I will recap several of the recent market developments. For years the challenge for Canadian producers has been unlocking landlocked resources and gaining greater access to global markets. Today that picture is changing. Following the completion of the TMX expansion and LNG Canada Phase 1 projects, the Pacific Link pipeline project has been designated a Project of National Interest, which means it will be reviewed and potentially approved by the federal government within one year.

This pipeline could provide access to tidewater for an additional 1 million barrels of oil per day. Additionally, Shell recently reached a final investment decision on LNG Canada Phase 2, and the recent election in British Columbia has brought growing political support for LNG development. There are numerous other pipeline proposals with western, eastern, and southern routes, as well as discussions on ports and additional infrastructure projects to support the growth of Canada’s energy industry.

And at the same time, there are emerging sources of domestic demand, including the proposed Green Light Data Center in Alberta, combined with a more supportive federal framework for advancing major projects and a federal mega tax deduction for infrastructure investments, creating a more constructive backdrop for Canadian energy investment. We believe these developments have the potential to unlock significant investment and support sustained drilling activity for both oil and gas across Western Canada.

Another market trend is customer consolidation, which continues in the Montney, Duvernay, and heavy oil regions. These larger consolidated entities often have longer-term development programs, which come with increased expectations for efficiency, field support, and a greater desire to utilize technology to meet these evolving customer needs. Precision continues to invest in our fleet, people, and technology. This alignment is evident in our growing Canadian contract book.

With 28 rigs under contract in the third quarter, up from 16 just one year ago, we are seeing and meeting the same evolving customer needs in our Well Service division, where Precision’s ability to deliver safe and consistent operations with well-trained and well-supported crews is an increasingly important differentiator and has resulted in improved financial performance year over year. The final area I’d like to cover is technology, which is core to supporting our crews and all our North American drilling operations. Our Alpha and Evergreen businesses are on track to have their highest revenue and contribution margin ever. This makes sense given that our customers continue to seek higher-efficiency operations and solutions that reduce emissions and diesel consumption. Our Clarity platform and Digital Twin offerings are adding another layer to what we can offer customers.

On our Q2 call, I mentioned that we would be opening our Calgary Remote Ops Center in August. Since then, we have had over 100 customer representatives from 12 different customers visit our center to observe our Alpha technology capabilities and interact with our Optimization team. We have had in-depth discussions with customers about our Optimization team’s work directly with our crews, using real-time data and AI-driven insights to continuously improve operating practices, equipment performance, and safe drilling results.

We are not just monitoring operations and providing data-driven insights and solutions, but are actively working with our crews to optimize performance. Although we have certainly opened up some eyes as to what is possible with our technology platform, and that is exciting, I’m more excited about the ongoing customer performance dialogue and Precision’s enhanced ability to strengthen long-term partnerships with our technology platform. These developments will continue to be an important part of the Precision story and we will certainly have more to report in the future.

In closing, I would like to thank our crews, field leadership, and all Precision employees for their commitment to safety, customer service, and operational excellence. Their work is the reason customers continue to choose Precision and what drives the success of our company. With that, I will hand the call back to the operator for questions.

OPERATOR

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 or you wish to remove yourself from the queue, please press star 11 again. We’ll pause for a moment while we compile our Q&A roster. Our first question comes from Aaron McNeil with TD Cowen. Your line is open.

Aaron McNeil (Analyst at TD Cowen)

Hey everyone, thanks for taking my questions. You’ve highlighted the potential for more rig upgrades next year. I assume that’s mostly capital rather than operating costs, but how should we think about the Canada versus US split? Would any US upgrades also bring reactivation costs? I think you’re running, call it, 45 rigs today versus roughly 50. I think they could go back to work without a reactivation spend. So there’s some wiggle room there. But, you know, at the end of the day, how should we think about the sustainability of that Q4 US margin guide into 2027, purely from the cost side?

Carey Ford (President and CEO)

Aaron, so I think, touching on the margin guidance first. We’ll give margin guidance for Q1 on our February call. But I can tell you that we think we’re hitting a more sustainable margin, and Q4 is going to reflect that. And that comes from two points. One is we’ve reactivated a large number of rigs this year. We reactivated six in Q3. We might have some reactivations next year, but it’ll be a much smaller number and it will be on a much higher base of activity. So if we enter the year next year, say we’re running a mid-40s rig count, one reactivation is going to have a much smaller impact on our overall fleet margins than it did this year. And I think the number of reactivations we would consider next year would be in the single digits, if we continue to see increased demand for rigs.

So I think it’s yes, it might continue, but it’s going to be a much smaller amount than this year. Anything to add?

Dustin Honing (Vice President, Operations Finance)

And then just to build on that, Aaron, to what was mentioned, we have just over 50 rigs that are warm, ready to go right now. We are actually reactivating one rig in Q4, and it just demonstrates, with that pace that Carey is talking about, that we have confidence in holding our margins.

Carey Ford (President and CEO)

Yeah. And I did guide to a lot of customer inquiries for rigs starting early next year, which should provide some potential for growth in activity from the Q4 levels.

Aaron McNeil (Analyst at TD Cowen)

Makes sense. Thanks. Maybe, Dustin, one for you. It won’t be the CRA one, I promise. With the 100 million of debt nearly met—the debt target nearly met—and only sort of 90 million left on the 700 long-term goal, it looks like 2027 is when free cash flow can shift meaningfully towards buybacks. You’ve bought back $47 million in stock so far this year, and you’re sort of up to 50% of free cash flow framework. Once debt repayment is no longer competing for cash, how much could that share of free cash flow, after, call it, after capital spending, go to the buyback in 2027?

And isn’t it reasonable to think that there’ll be a ramp next year, and could you look at a SIB or other ways to accelerate repurchases?

Dustin Honing (Vice President, Operations Finance)

Yeah, Aaron, I would say we’re really excited about the flexibility we’ve built in the company. We’re nearly there on the debt reduction journey. We’ve got a little bit more to go. We’ll chip at the 25 million here going—we’ll give formal guidance as we always do. Next year, rest assured, our strategic priorities will have a formal target on what we intend to return to shareholders, but certainly see share buybacks as a primary avenue that we can enhance value for our shareholders.

Carey Ford (President and CEO)

Yeah, and I would just add to that, I think at the end of this year, when we pay down $100 million, we’ll have, I think, $60 or $65 million left on the debt repayment. And, you know, we’ve been talking about trying to get to a one-times multiple of leverage, and we should be there at the end of this year, very beginning of next year. And as Dustin said, it does give us a lot more flexibility on how we deploy capital to shareholders.

Aaron McNeil (Analyst at TD Cowen)

Had to try. Thanks, guys. I’ll turn it back. Thanks.

OPERATOR

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

Keith Mackey (Analyst at RBC Capital Markets)

Hey, good morning, and thanks for taking my questions. Maybe can we just talk a little bit more about the potential upgrade opportunity? Carey, I know you took some time to detail out the rationale for doing such upgrades. Maybe just talk about—

Pete (Analyst)

How many rigs that could potentially be, what types of upgrades you might be putting on there. Is there any robotics inclusion, for example, and would that potentially be the 2026 portion of the total spend or would that just be the total spend of this potential opportunity as far as CapEx goes?

Carey Ford (President and CEO)

Okay, so I think from that there’s a few questions in there. So the last one I’ll answer first. So the top 2026 potential spend would be for a customer in Canada and that would be effectively all of the spend for the customer for the one we referenced in our press release. In terms of upgrades in 2027 in Canada it will be similar. We’d probably have opportunity to do two or three kind of ERD upgrades where we’ve completed two this year or completed one, we have one for delivery here soon. So be those types of upgrades in the Montney and then continued upgrades for super singles in the heavy oil regions. And I think that’s probably also low single digits, maybe one or two or three of those types of rigs. In the U.S. it’s going to be reactivating and upgrading Super Triple 1500s likely for the Permian, but we do have some opportunities for the Haynesville as well.

And I think as I mentioned on the last question that’s going to be single digit numbers of opportunities. You know, probably I would say low to mid single digit types of opportunities in the U.S. So we’re not—I’m not with that comment, I’m really trying to capture the benefit of the upgrades that we’ve completed and the fact that those opportunities are finite, and when we have them and it lines up with a good contract and a good capital return, we want to execute on it, but there’s not an unlimited number of those opportunities.

Pete (Analyst)

Perfect. Understood. Can you maybe just detail a little bit more about what you’re seeing in the Canadian market? Certainly outlined some positive trends as far as the macro backdrop and policy backdrop. Do you think that those changes might ultimately lead to the industry requiring more rigs, or are we kind of going to be in a market where it’s just we might get the same number of rigs running for more quarters during the year? Like normally we have the Q1 peak and then it kind of comes back closer to that in Q3 and Q4.

Do you see that changing, or are we actually going to need more rigs in total to service some of these new aspirations, do you think?

Carey Ford (President and CEO)

I think we will see the way you described it with more of a level load throughout the year has certainly given us more drilling days throughout the year, sometimes with the same number of rigs. I mean, we’ve commented on previous conference calls, when we do a pad upgrade to a super single, we typically add 100 drilling days throughout the year. So if we have 27 super single rigs that don’t have pad configurations yet, if we did all of those, we would actually add nine more rigs to our fleet or the capability of nine more rigs.

And we also have the opportunity to move Super Triple 1200s from the U.S. market to Canada. So if there is more demand, we think we can meet it. And if there’s more drilling days throughout the year, we’re going to benefit from that. But we certainly haven’t had customers point to the need to add significantly more rigs to the Canadian fleet. But we’ll see how this thing develops.

Pete (Analyst)

Understood. Appreciate the color.

Carey Ford (President and CEO)

Okay, thanks, Pete.

OPERATOR

Our next question comes from Sean Mitchell with Daniel Energy Partners. Your line is open.

Sean Mitchell (Analyst at Daniel Energy Partners)

Good morning. Thanks for taking the questions, Carey. Maybe just talk a little bit about where you’re seeing inflation. How is that impacting the global operations and what are you guys doing today to manage it? I think the industry at large, obviously there’s lots to talk about higher diesel costs, but just where are you seeing it most within labor, parts, logistics? Any color on that? On inflation?

Carey Ford (President and CEO)

Sure. I’ve got a couple areas I’d point to, but maybe I’ll point it to Dustin because he’s really in the day to day on how it’s impacting our operating costs.

Dustin Honing (Vice President, Operations Finance)

Yeah. Hey Sean. It’s certainly a primary focus for any oilfield service provider, but I’d say today we’ve managed it very well. We have the benefit of a vertically integrated business model. We have internal manufacturing, our tech centers, we can do our upgrades and our maintenance projects in house, and we even have our supply stores. So it’s helped us mitigate some of the cost escalation. But if I were to pick a few primary areas that we’re constantly managing every day, I’d say one, access and retention of high-end field labor, that’s certainly paramount.

Number two would be steel-intensive purchases, and I point specifically to drill pipe. And that’s further compounded by accelerated wear that we’re seeing in some basins that we’re operating, and then, just as you mentioned, higher diesel prices. And that really affects several areas of our supply chain. If I put that into a regional perspective, I’d say the two parts of our business most exposed to inflation—certainly international drilling would be one, and that shouldn’t surprise anyone with the logistical challenges we’re dealing with—but certainly cmp, our business here in Canada, with well servicing, that segment, I would say staffing and retaining high-end talent remains an industry-wide challenge. And it’s the only business where we directly absorb the cost of fuel for our rigs, whereas in drilling it’s more of a pass-through charge.

So we’ve had to work really closely with our customers to help manage both of those challenges. Although we don’t really procure fuel directly in the drilling business, it’s been a platform for our Evergreen offering and I’d say there’s certainly been an uptick of interest from our customers there.

Carey Ford (President and CEO)

Yeah, the Evergreen offering is an emissions reduction offering, but it’s also a diesel reduction offering. So we’ve had opportunities to put batteries on rigs, bi-fuel systems, hydrogen injection on our super single rigs, all with the aim of helping our customers reduce their diesel costs. So that’s been one of the big drivers of the success of that service line this year. The other point that Dustin kind of alluded to on retaining crews—we had a field-wide labor wage increase in Canada, I guess probably a couple months ago, and then about a month ago we had a similar increase in the U.S., and so that’s largely due to our crews, our need to retain crews in an increase-in-activity environment, and just a lot of growth in infrastructure projects on both sides of the border. So those would be the big areas there—diesel and labor.

Sean Mitchell (Analyst at Daniel Energy Partners)

Got it. Thanks for the color. Maybe I’ll squeeze one more in. Just around contract duration—are U.S. operators, and kind of where are their heads today on willingness to sign contracts or multi-year? Has that shifted with the rig count increasing? Are they looking for longer term? Are any of these guys looking to lock in longer-term rigs before the market potentially could tighten further, or are those conversations starting to happen? Any color on that front?

Carey Ford (President and CEO)

Sure, I think that’s a really good question, Sean. The first part of this year I think we were in a zero—call it spot to six-month—type market with the occasional one-year contract. And then throughout the middle of this year it’s kind of gone into six-month to one-year contracts, and now we’re having more conversations in the one- to two-year range. And it’s certainly not where the broad market is. I think the broad market is really kind of in a six-month to one-year type range.

But we are having more conversations in that 18-month to two-year range with customers. So we’re certainly seeing it move. That’s helpful.

Sean Mitchell (Analyst at Daniel Energy Partners)

Thank you. I’ll turn it back.

OPERATOR

Thank you again, ladies and gentlemen. If you have a question or a comment at this time, please press star-one-one on your telephone. Our next question comes from Tim Monticello with ATB Capital Markets. Your line is open.

Tim Monticello (Analyst at ATB Capital Markets)

Hey there. Most of my questions have been answered, but I’m curious about Canadian pricing, the Canadian pricing outlook here. It seems like the Q1 activity profile is for full utilization. It’s been strong for a couple quarters here. Are you seeing any willingness to move pricing higher across the industry?

Carey Ford (President and CEO)

Yeah, there’s certainly support for it with utilization and, you know, kind of increasing performance requirements for the rigs. And we have moved pricing up a bit throughout the year. I wouldn’t call it a step change in pricing per rig class. And we really won’t have an opportunity to broadly reprice rigs until spring breakup. But we are having lots of conversations with customers about adding features to the rigs that will drive pricing higher than what we’re seeing today.

Tim Monticello (Analyst at ATB Capital Markets)

Okay, got it. And then I guess in the U.S. market you were guiding to getting close to 50 rigs by the end of the year previously. Now it’s sort of mid-40s. Is that just a customer scheduling phenomena or is there something else we should be thinking about? And

Carey Ford (President and CEO)

I was going to say that the guidance on the last conference call said that we would be low 40s in Q3 and that we would likely touch the high 40s at some point during the quarter. I think we were at 46 rigs last week, so we’re not quite at high 40s, but maybe call it one or two rigs short. But I don’t remember ever giving formal guidance for 50 rigs.

Tim Monticello (Analyst at ATB Capital Markets)

Okay, maybe I just made that up. So, no change to the outlook in the U.S., and you think you’ll see some tailwinds in ’27 versus where you exit in ’26.

Carey Ford (President and CEO)

Yeah, and Tim, I mean, I think 50 rigs is on the horizon and I don’t know when that happens. You know, it’s possible that it could happen this year. It’s probable to happen sometime in the first part of next year. And as Dustin said, we’ll have 52 hot rigs at the end of this quarter, which, you know, we should be able to hit that number without sustaining any major reactivation costs.

Tim Monticello (Analyst at ATB Capital Markets)

Okay. And then maybe just an update on international opportunities. Maybe you can talk a little bit about what you’re seeing from that Argentina partnership and any opportunities to reactivate rigs in the Middle East.

Carey Ford (President and CEO)

Yeah, I think we’ve got the one reactivation scheduled in Kuwait in the middle of next year. And outside of that, we don’t have anything in the works. In terms of Argentina, it certainly is an exciting market and there’s a lot of demand there for U.S. high-spec rigs to get upgraded and move down to the market. We’ve had conversations with every single major operator in Argentina about it. And so it’s not a matter of the demand and us being able to deliver to meet the demand.

It’s just a matter of contract terms and what we’re looking for in terms of some financial risk in a contract in the market. We haven’t been able to meet in the middle yet, but we’re still working on it. And if we do, it’ll be a good contract and we’ll be able to deliver.

Tim Monticello (Analyst at ATB Capital Markets)

Okay, great. I appreciate it and congrats on the next quarter.

Carey Ford (President and CEO)

Thanks, Tim. Thanks, Tim.

OPERATOR

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

Derek Potheiser (Analyst at Piper Sandler)

Hey, just want to ask about your comments around the elevated request for startups for some rigs in the beginning part of the year. Maybe you can help us understand a little more if that’s public versus private, you know, basin-specific. Obviously you have the 52 hot-stack rigs and I think it sounds like that’s your longer-term ambition. But maybe just expand more on those comments as far as, you know, who’s requesting the rigs and where are those requests coming from?

Carey Ford (President and CEO)

So it’s a mix of publics and privates. I would say that the publics in the past few months have gotten more active with rig inquiries, where the first half of last year was largely, the first half of this year was largely the private customers. And then the basins where we’re seeing it largely in the Permian, but a handful in the Haynesville as well and the Rockies. I would say the one rig that we’ve guided to in the Northeast is kind of already in the bag and we’ve got contracts signed.

So I would say that the comment on the Q1 inquiries are really Permian, with a few in the Haynesville and a few in the Rockies.

Derek Potheiser (Analyst at Piper Sandler)

Okay, that makes sense. And then, so the Permian, you said you’re up to 16 rigs. I think you were eight last year. So huge, huge improvement there. When we think of Precision Drilling, we think really just primarily the Northeast and the Haynesville. But obviously you’re a clear Permian player making a lot of strides there. Any other regions that you think the market’s underestimating you guys, that are kind of targets for growth as you look into next year, just over time that we should really think about?

Carey Ford (President and CEO)

Well, those are the four main regions for us today. It’d be the Rockies, the Permian, the Haynesville and Marcellus. We have a couple rigs working in the Eagle Ford, and that kind of blends into the Haynesville, so we might see a little bit more activity there. But currently we don’t have any rigs running in Oklahoma or North Dakota, which would be the other two big markets. And I would say too that in some of these inquiries the robotics discussion has heated up a bit, and we are having more customers in both the U.S. and Canada talking to us a bit deeper about the robotics offering, and so we’re excited about those potential opportunities.

Derek Potheiser (Analyst at Piper Sandler)

Great. Thank you very much. Turn it back.

OPERATOR

Thank you, Derek. And I’m not showing any further questions at this time. I turn the call back over to Lavon for any further remarks.

Lavon Zduenick (Director of Investor Relations)

Thank you to everyone for joining us today. If there’s any follow-up questions you can reach out to myself and the Investor Relations group. Thank you. We’re signing off.

OPERATOR

Ladies and gentlemen, that concludes today’s presentation. You may now disconnect and have a wonderful day.

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