PDS 6-K
PRECISION DRILLING Corp (PDS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Section 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of, April 2026
Commission File Number: 001-14534
Precision Drilling Corporation
(Exact name of registrant as specified in its charter)
800, 525 - 8 Avenue S.W.
Calgary, Alberta
Canada T2P 1G1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F Form 40-F X
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: April 29, 2026 | PRECISION DRILLING CORPORATION | |
| By: | /s/ Dustin D Honing | |
| Name: | Dustin D. Honing | |
| Title: | Chief Financial Officer | |
Exhibit 31.1
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I, Carey T. Ford, President and Chief Executive Officer of Precision Drilling Corporation, certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Precision Drilling Corporation (the "issuer"), for the interim period ended March 31, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (1992) and the Control Objectives for Information and Related Technologies (COBIT). |
| 5.2 | ICFR – material weakness relating to design: N/A. |
| 5.3 | Limitation on scope of design: N/A. |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2026 and ended on March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: April 29, 2026
| By: | /s/Carey T Ford | ||
|
Name: |
Carey T. Ford |
||
| Title: | President and Chief Executive Officer | ||
Exhibit 31.2
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I, Dustin D. Honing, Chief Financial Officer of Precision Drilling Corporation, certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Precision Drilling Corporation (the "issuer"), for the interim period ended March 31, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (1992) and the Control Objectives for Information and Related Technologies (COBIT). |
| 5.2 | ICFR – material weakness relating to design: N/A. |
| 5.3 | Limitation on scope of design: N/A. |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2026 and ended on March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: April 29, 2026
| By: | /s/Dustin D Honing | ||
|
Name: |
Dustin D. Honing |
||
| Title: | Chief Financial Officer | ||
Exhibit 99.1
PRECISION DRILLING CORPORATION
First Quarter Report for the three months ended March 31, 2026 and 2025
This report contains “forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this report. This report contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Net Capital Spending, Working Capital and Total Long-Term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies. See “Financial Measures and Ratios” later in this report.
Precision Drilling Corporation ("Precision" or the "Company") (TSX:PD; NYSE:PDS) announces its 2026 first quarter results, reflecting higher utilization in both Canadian and U.S. drilling and well service operations year over year.
Financial Highlights
| · | Revenue of $526 million was 6% higher than $496 million reported in the first quarter of 2025, due to higher activity in both the U.S. and Canada, which more than offset lower results internationally. |
| · | Adjusted EBITDA(1) was $124 million, including $19 million of share-based compensation expense as our share price appreciated 39% in the quarter. In 2025, our Adjusted EBITDA was $137 million and included $3 million of restructuring costs and $3 million of share-based compensation expense. |
| · | Net earnings attributable to shareholders in the first quarter was $17 million compared with $35 million in 2025. Our lower net earnings in 2026 was due to higher share-based compensation expense and increased depreciation expense from the change in useful life estimates. |
| · | Cash provided by operations during the quarter was $63 million, allowing the Company to repurchase $4 million of common shares and reduce debt by $25 million. |
| · | Capital expenditures in the first quarter of 2026 were $65 million compared to $60 million in 2025. Precision has revised its 2026 capital budget to $265 million from $245 million, driven by two contracted Canadian Super Triple drilling rig upgrades and higher expected activity in Canada and the U.S. |
Operational Highlights
| · | Canada averaged 79 active rigs compared to 74 active rigs in the first quarter of 2025, outpacing Canadian industry activity that declined 7%(2). |
| · | Canadian revenue per utilization day decreased to $35,021 from $35,601, primarily due to rig mix, as we had proportionately fewer active Super Triples. |
| · | U.S. averaged 37 active rigs in the first quarter of 2026 versus 30 in 2025. Precision's first quarter 2026 U.S. rig utilization days increased 24% while industry activity declined 7%(2). |
| · | U.S. revenue per utilization day increased to US$33,715 from US$33,157 in the same period last year. Excluding revenue from turnkey projects and idle but contracted rigs, revenue per utilization day in the first quarter of 2026 of US$31,865 was comparable to US$31,894 in 2025. |
| · | Continued deploying Alpha™ digital technologies to unlock performance improvements through automation, data analytics and real-time optimization, delivering record drilling results for our Canadian and U.S. customers. |
| · | Internationally, we had seven rigs under contract versus eight in the first quarter of 2025. Revenue per utilization day was US$51,596 from US$49,419 in 2025, driven by higher mobilization revenue. |
| · | Canadian well service rig operating hours increased 4% versus the same quarter in 2025. |
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
| (2) | See "SEGMENT REVIEW OF CONTRACT DRILLING SERVICES." |
1
SELECT FINANCIAL AND OPERATING INFORMATION
Financial Highlights
| For the three months ended March 31, | ||||||||||||
| (Stated in thousands of Canadian dollars, except per share amounts) | 2026 | 2025 | % Change | |||||||||
| Revenue | 526,051 | 496,331 | 6.0 | |||||||||
| Adjusted EBITDA(1) | 123,947 | 137,497 | (9.9 | ) | ||||||||
| Net earnings | 17,845 | 34,947 | (48.9 | ) | ||||||||
| Net earnings attributable to shareholders | 17,376 | 34,511 | (49.7 | ) | ||||||||
| Cash provided by operations | 63,154 | 63,419 | (0.4 | ) | ||||||||
| Cash used in investing activities | 74,702 | 57,202 | 30.6 | |||||||||
| Capital spending by spend category(1) | ||||||||||||
| Expansion and upgrade | 30,274 | 19,546 | 54.9 | |||||||||
| Maintenance and infrastructure | 34,726 | 40,419 | (14.1 | ) | ||||||||
| Proceeds on sale | (2,287 | ) | (3,765 | ) | (39.3 | ) | ||||||
| Net capital spending(1) | 62,713 | 56,200 | 11.6 | |||||||||
| Net earnings attributable to shareholders per share: | ||||||||||||
| Basic | 1.34 | 2.52 | (46.8 | ) | ||||||||
| Diluted | 1.34 | 2.20 | (39.1 | ) | ||||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 12,932 | 13,683 | (5.5 | ) | ||||||||
| Diluted | 12,941 | 14,287 | (9.4 | ) | ||||||||
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
Operating Highlights
| For the three months ended March 31, | ||||||||||||
| 2026 | 2025 | % Change | ||||||||||
| Contract drilling rig fleet | 184 | 215 | (14.4 | ) | ||||||||
| Drilling rig utilization days: | ||||||||||||
| Canada | 7,116 | 6,680 | 6.5 | |||||||||
| U.S. | 3,332 | 2,691 | 23.8 | |||||||||
| International | 611 | 720 | (15.1 | ) | ||||||||
| Revenue per utilization day: | ||||||||||||
| Canada (Cdn$) | 35,021 | 35,601 | (1.6 | ) | ||||||||
| U.S. (US$) | 33,715 | 33,157 | 1.7 | |||||||||
| International (US$) | 51,596 | 49,419 | 4.4 | |||||||||
| Operating costs per utilization day: | ||||||||||||
| Canada (Cdn$) | 20,739 | 20,821 | (0.4 | ) | ||||||||
| U.S. (US$) | 24,424 | 23,568 | 3.6 | |||||||||
| Service rig fleet(1) | 145 | 143 | 1.4 | |||||||||
| Service rig operating hours(1) | 68,219 | 65,635 | 3.9 | |||||||||
| (1) | The service rig fleet and service rig operating hours exclude our U.S. operations that we wound down in the second quarter of 2025. |
Drilling Activity
| Average for the quarter ended 2025 | Average for the quarter ended 2026 | |||||||||||||||||||
| Mar. 31 | June 30 | Sept. 30 | Dec. 31 | Mar. 31 | ||||||||||||||||
| Average Precision active rig count(1): | ||||||||||||||||||||
| Canada | 74 | 50 | 63 | 66 | 79 | |||||||||||||||
| U.S. | 30 | 33 | 36 | 37 | 37 | |||||||||||||||
| International | 8 | 7 | 7 | 7 | 7 | |||||||||||||||
| Total | 112 | 90 | 106 | 110 | 123 | |||||||||||||||
| (1) | Average number of drilling rigs working or moving. |
2
Financial Position
| (Stated in thousands of Canadian dollars, except ratios) | March 31, 2026 | December 31, 2025 | ||||||
| Working capital(1) | 208,099 | 186,815 | ||||||
| Cash | 41,462 | 85,781 | ||||||
| Long-term debt | 663,859 | 679,291 | ||||||
| Total long-term financial liabilities(1) | 728,252 | 746,944 | ||||||
| Total assets | 2,748,154 | 2,726,690 | ||||||
| Long-term debt to long-term debt plus equity ratio(1) | 0.29 | 0.30 |
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
Summary for the three months ended March 31, 2026:
| · | Revenue in the first quarter was $526 million, $30 million higher than in 2025 as U.S. and Canadian revenue increased by $24 million and $13 million, respectively, due to higher drilling activity, while partially offset by lower international drilling activity. |
| · | Adjusted EBITDA decreased 10% to $124 million from $137 million in the first quarter of 2025. The decrease was primarily due to higher share-based compensation expense of $19 million compared with $3 million in the same period last year, as well as increased rig reactivation costs. For additional information on share-based compensation, please refer to "Other Items" later in this report. |
| · | Net earnings attributable to shareholders was $17 million or $1.34 per share compared to $35 million or $2.52 per share for the same period last year. The decrease was due to higher share-based compensation expense, as our share price appreciated 39% in the quarter, and increased depreciation expense from the change in useful life estimates. |
| · | Cash provided by operations was $63 million and the Company repurchased 36,874 shares for $4 million and reduced long-term debt by $25 million. Precision ended the quarter with $41 million of cash and more than $430 million in available liquidity. |
| · | In Canada, our operating margin(2) was $14,282 compared to $14,780 in the same period last year. The decrease was primarily due to rig mix, as we had proportionately fewer active Super Triples. |
| · | In the U.S., our operating margin was US$9,291 compared to US$9,589 in 2025. Excluding the impact of turnkey projects and idle but contracted rig revenue of negative US$4 in 2026 and US$1,229 in 2025, our operating margin was US$9,287 in 2026 compared to US$8,360 in 2025. The increase was primarily due to fixed costs being spread over more activity days. |
| · | Internationally, we had revenue per utilization per day of US$51,596 compared to US$49,419 in the same period last year. The increase of 4% was primarily due to higher mobilization revenue. We realized revenue of US$32 million in the first quarter of 2026 compared to US$36 million in 2025 as higher revenue per utilization day was more than offset by lower activity following the expiration of a drilling contract in Kuwait. |
| · | Completion and Production Services revenue was $80 million, consistent with the first quarter of 2025. Adjusted EBITDA was $18 million, representing 22%(1) of revenue which is consistent with the first quarter of 2025. |
| · | General and administrative expenses were $42 million versus $30 million in the first quarter of 2025, with the increase primarily due to higher share-based compensation expense. |
| · | Capital expenditures were $65 million compared to $60 million in the first quarter of 2025 and included $35 million for the maintenance of existing assets, infrastructure, and intangible assets and $30 million for upgrades(1). |
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
| (2) | Defined as revenue per utilization day less operating costs per utilization day. |
STRATEGY
Precision’s vision is to be globally recognized as the High Performance, High Value provider of land drilling services. We work toward this vision by defining and measuring our results against strategic priorities that we establish at the beginning of every year.
Precision’s 2026 strategic priorities and the progress made during the first quarter are summarized below.
| 1. | Drive revenue growth and deepen customer relationships through contracted upgrades, continuous operational excellence, and by leveraging our performance-driven technology as a key competitive differentiator. |
| · | Grew rig utilization in both Canada and the U.S. even though industry activity declined in each region. |
| · | Maintained strong pricing in Canada and the U.S. compared to the previous quarter and the first quarter of 2025. |
| · | Deployed $30 million in targeted fleet upgrades to meet evolving customer requirements and deliver efficient, high-performance drilling outcomes. |
3
| 2. | Maximize free cash flow through strategic capital deployment and sustained cost discipline. |
| · | Generated cash from operations of $63 million, allowing Precision to reduce debt and buy back shares. |
| · | Recorded resilient operating margins in Canada and the U.S. compared to the previous quarter and the first quarter of 2025. |
| 3. | Enhance shareholder returns by reducing debt by $100 million in 2026 and allocating up to 50% of free cash flow, before debt repayments, directly to shareholders. |
| · | Reduced debt by $25 million and continue to target a sustained Net Debt to Adjusted EBITDA ratio(1) of below 1.0 times. |
| · | Returned $4 million to shareholders by repurchasing 36,874 shares during the quarter. |
| · | Well positioned to meet our long-term debt reduction target of $700 million between 2022 and 2027. As of March 31, 2026, we have reduced our debt by $560 million since the beginning of 2022. |
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
OUTLOOK
Ongoing geopolitical tensions in the Middle East have increased global supply risks, contributing to higher oil prices and a renewed focus on energy supply security. This environment continues to support steady upstream investment and near-term activity in politically stable jurisdictions. Customers continue to prioritize capital discipline and returns, resulting in measured but sustained drilling rather than reacting to short-term price movements. However, if the oil price outlook remains constructive, we expect activity levels to increase over the course of the year.
In Canada, demand for our Super Series rigs remains robust, driving one of our most active winter drilling seasons. Improving commodity prices for heavy oil and condensate, plus additional takeaway capacity for both oil and natural gas continue to support Canadian activity levels. As we move into spring break up with more pad-capable Super Triple and Super Single rigs and an improved oil price environment, we expect our second quarter activity to be well above the prior year's level.
In the U.S., the natural gas rig count increased approximately 20% in 2025 as customers became more constructive on LNG off-take and rising AI-related power demand. We capitalized on this trend by increasing activity in key natural gas basins such as the Haynesville and Marcellus, resulting in a 24% increase in U.S. drilling rig utilization days in the first quarter of 2026 compared with 2025. Oil directed drilling activity remained subdued through 2025 and into 2026; however, with a more favorable pricing environment, we are experiencing a notable increase in inquiries from both oil and natural gas customers regarding rig availability and expect further rig additions and pricing increases in the second half of the year.
Internationally, despite minor disruptions and increased costs due to the tension in the Middle East, our crews are safely delivering results for our international customers. We have seven active rigs, including four in Kuwait and three in the Kingdom of Saudi Arabia. These rigs are under five-year term contracts that extend into 2027 and 2028. We currently expect seven active rigs for the remainder of the year. We continue to seek opportunities for our two idle international rigs.
As the premier well service provider in Canada, the long-term outlook for this business is positive, driven by increased takeaway capacity from the Trans Mountain pipeline expansion and LNG Canada, and our High Performance, High Value service offering. We expect customer demand and pricing to remain strong in the foreseeable future, assuming no significant change in market conditions.
Overall, our outlook for the remainder of the year is optimistic, with potential upside driven by sustained higher oil prices amid ongoing geopolitical tensions in the Middle East. In Canada, we expect second quarter operating margins to average between $12,000 and $13,000 per utilization day, driven by a higher proportion of Super Singles working through spring break up compared with the prior year. In the U.S., revenue per utilization day is expected to remain stable, while operating margins are anticipated to range between US$7,500 and US$8,500 per utilization day due to additional rig reactivation expenses.
4
Contracts
The following chart outlines the average number of drilling rigs under term contract by quarter as of April 29, 2026. For the quarter ending after March 31, 2026, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts.
| As at April 29, 2026 | Average for the quarter ended 2025 | Average | Average for the quarter ended 2026 | Average | ||||||||||||||||||||||||||||||||||||
| Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2025 | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | 2026 | |||||||||||||||||||||||||||||||
| Average rigs under term contract: | ||||||||||||||||||||||||||||||||||||||||
| Canada | 20 | 18 | 16 | 21 | 19 | 21 | 17 | 17 | 16 | 18 | ||||||||||||||||||||||||||||||
| U.S. | 16 | 16 | 17 | 17 | 17 | 15 | 14 | 11 | 5 | 11 | ||||||||||||||||||||||||||||||
| International | 8 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | ||||||||||||||||||||||||||||||
| Total | 44 | 41 | 40 | 45 | 43 | 43 | 38 | 35 | 28 | 36 | ||||||||||||||||||||||||||||||
In Canada, because of the seasonal nature of well site access, term contracted rigs normally generate 250-300 utilization days per rig year. Accordingly, our anticipated Canadian rigs under term contract may fluctuate as customers complete their commitments earlier than projected. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year. In accordance with the seasonality of our business and varying levels of rig count, we generally experience builds of working capital in the first and third quarters and releases of working capital in the second and fourth quarters.
Capital Spending and Free Cash Flow Allocation
Capital spending in 2026 is expected to be $265 million, an increase of $20 million from our previously announced plan, driven by two contracted Canadian Super Triple drilling rig upgrades and higher expected activity in Canada and the U.S. Capital spending by spend category(1) is expected to include $168 million for maintenance, infrastructure, and intangibles, and $97 million for expansion and upgrades. We expect to spend $238 million in the Contract Drilling Services segment, $21 million in the Completion and Production Services segment and $6 million in the Corporate and Other segment. At March 31, 2026, Precision had capital commitments of $170 million with payments expected through 2028.
We remain committed to our debt reduction plans in 2026 and expect to reduce debt by $100 million, positioning us near our long-term target of reducing debt by $700 million between 2022 and 2027 and achieving a sustained Net Debt to Adjusted EBITDA ratio(1) of below 1.0 times. In 2026, we intend to allocate up to 50% of free cash flow before debt repayments to share repurchases.
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
Commodity Prices
First quarter average West Texas Intermediate and Western Canadian select oil prices remained largely consistent with the same period in 2025, while the average Henry Hub natural gas price decreased by 10% and AECO decreased by 6%.
| For the three months ended March 31, | Year ended December 31, | |||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Average oil and natural gas prices | ||||||||||||
| Oil | ||||||||||||
| West Texas Intermediate (per barrel) (US$) | 71.93 | 71.42 | 64.81 | |||||||||
| Western Canadian Select (per barrel) (US$) | 57.36 | 58.80 | 53.87 | |||||||||
| Natural gas | ||||||||||||
| United States | ||||||||||||
| Henry Hub (per MMBtu) (US$) | 3.48 | 3.87 | 3.63 | |||||||||
| Canada | ||||||||||||
| AECO (per MMBtu) (CDN$) | 2.00 | 2.13 | 1.69 | |||||||||
Source: Sproule Escalated Price Forecast as of March 31, 2026.
5
SEGMENTED FINANCIAL RESULTS
Precision’s operations are reported in two segments: Contract Drilling Services, which includes our drilling rigs, procurement and distribution of oilfield supplies, and the manufacture, sale and repair of drilling equipment; and Completion and Production Services, which includes our service rigs, oilfield equipment rental, and camp services.
| For the three months ended March 31, | ||||||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | % Change | |||||||||
| Revenue | ||||||||||||
| Contract Drilling Services | 449,009 | 419,457 | 7.0 | |||||||||
| Completion and Production Services | 79,931 | 79,330 | 0.8 | |||||||||
| Inter-segment eliminations | (2,889 | ) | (2,456 | ) | 17.6 | |||||||
| 526,051 | 496,331 | 6.0 | ||||||||||
| Adjusted EBITDA:(1) | ||||||||||||
| Contract Drilling Services | 132,995 | 136,016 | (2.2 | ) | ||||||||
| Completion and Production Services | 17,612 | 17,546 | 0.4 | |||||||||
| Corporate and Other | (26,660 | ) | (16,065 | ) | 66.0 | |||||||
| 123,947 | 137,497 | (9.9 | ) | |||||||||
| Depreciation and amortization | 84,330 | 75,036 | 12.4 | |||||||||
| Gain on asset disposals | (1,713 | ) | (2,872 | ) | (40.4 | ) | ||||||
| Foreign exchange | 448 | 367 | 22.1 | |||||||||
| Finance charges | 12,356 | 15,760 | (21.6 | ) | ||||||||
| (Gain) loss on investments and other assets | 1,467 | (49 | ) | (3,093.9 | ) | |||||||
| Net earnings before income tax | 27,059 | 49,255 | (45.1 | ) | ||||||||
| Income taxes | 9,214 | 14,308 | (35.6 | ) | ||||||||
| Net earnings | 17,845 | 34,947 | (48.9 | ) | ||||||||
| Non-controlling interest | 469 | 436 | 7.6 | |||||||||
| Net earnings attributable to shareholders | 17,376 | 34,511 | (49.7 | ) | ||||||||
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
SEGMENT REVIEW OF CONTRACT DRILLING SERVICES
| For the three months ended March 31, | ||||||||||||
| (Stated in thousands of Canadian dollars, except where noted) | 2026 | 2025 | % Change | |||||||||
| Revenue | 449,009 | 419,457 | 7.0 | |||||||||
| Expenses: | ||||||||||||
| Operating | 303,573 | 272,412 | 11.4 | |||||||||
| General and administrative | 12,441 | 11,029 | 12.8 | |||||||||
| Adjusted EBITDA(1) | 132,995 | 136,016 | (2.2 | ) | ||||||||
| Adjusted EBITDA as a percentage of revenue(1) | 29.6 | % | 32.4 | % | ||||||||
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
| Canadian onshore drilling statistics:(1) | 2026 | 2025 | ||||||||||||||
| Precision | Industry(2) | Precision | Industry(2) | |||||||||||||
| Average number of active land rigs for quarters ended: | ||||||||||||||||
| March 31 | 79 | 199 | 74 | 214 | ||||||||||||
| (1) | Canadian operations only. |
| (2) | Source: Baker Hughes rig counts. |
| United States onshore drilling statistics:(1) | 2026 | 2025 | ||||||||||||||
| Precision | Industry(2) | Precision | Industry(2) | |||||||||||||
| Average number of active land rigs for quarters ended: | ||||||||||||||||
| March 31 | 37 | 530 | 30 | 572 | ||||||||||||
| (1) | United States lower 48 operations only. |
| (2) | Source: Baker Hughes rig counts. |
Revenue from Contract Drilling Services was $449 million compared to $419 million in the first quarter of 2025, due to increased drilling rig activity in the U.S. and Canada, offset in part by lower international drilling activity. Precision's U.S. and Canadian drilling rig utilization days increased by 24% and 7%, respectively. Our international revenue decreased by 11% due to lower drilling activity following the expiration of a drilling contract in Kuwait, while partially offset by higher mobilization revenue.
6
Adjusted EBITDA was $133 million for the quarter and represented 30% of revenue compared to 32% in 2025. The percentage decrease was mainly driven by our international rig mix and higher international rig reactivation costs.
In Canada, 26% of our utilization days were generated from rigs under term contract in the first quarter of 2026 compared to 33% in 2025. In the U.S., 34% of utilization days were generated from rigs under term contract in the first quarter of 2026 compared to 55% in 2025.
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES
| For the three months ended March 31, | ||||||||||||
| (Stated in thousands of Canadian dollars, except where noted) | 2026 | 2025 | % Change | |||||||||
| Revenue | 79,931 | 79,330 | 0.8 | |||||||||
| Expenses: | ||||||||||||
| Operating | 59,675 | 59,112 | 1.0 | |||||||||
| General and administrative | 2,644 | 2,672 | (1.0 | ) | ||||||||
| Adjusted EBITDA(1) | 17,612 | 17,546 | 0.4 | |||||||||
| Adjusted EBITDA as a percentage of revenue(1) | 22.0 | % | 22.1 | % | ||||||||
| Well servicing statistics: | ||||||||||||
| Number of service rigs (end of period)(2) | 145 | 143 | 1.4 | |||||||||
| Service rig operating hours(2) | 68,219 | 65,635 | 3.9 | |||||||||
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
| (2) | The service rig fleet and service rig operating hours exclude our U.S. operations that we wound down in the second quarter of 2025. |
Completion and Production Services revenue in the first quarter of 2026 was largely consistent with 2025. Adjusted EBITDA of $18 million was consistent with the same period in the prior year.
SEGMENT REVIEW OF CORPORATE AND OTHER
Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had negative Adjusted EBITDA of $27 million for the first quarter versus a negative Adjusted EBITDA of $16 million in the same period last year primarily due to higher share-based compensation expense.
OTHER ITEMS
Share-based Incentive Compensation Plans
We have several cash and equity-settled share-based incentive plans for non-management directors, officers, and other eligible employees. Our accounting policies for each share-based incentive plan can be found in our 2025 Annual Report.
A summary of expense amounts under these plans during the reporting periods are as follows:
| For the three months ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Cash settled share-based incentive plans | 15,961 | 403 | ||||||
| Equity settled share-based incentive plans | 2,912 | 2,427 | ||||||
| Total share-based incentive compensation plan expense | 18,873 | 2,830 | ||||||
| Allocated: | ||||||||
| Operating | 3,763 | 1,128 | ||||||
| General and Administrative | 15,110 | 1,702 | ||||||
| 18,873 | 2,830 | |||||||
Our cash settled share-based compensation expense increased $16 million compared with 2025 due to our share price appreciating 39% during the first quarter of 2026.
During the first quarters of 2025 and 2026, we issued Executive Restricted Share Units (Executive RSUs) to certain senior executives that were aligned with our annual compensation framework. These issuances resulted in an equity-settled share-based compensation expense of $3 million for the quarter.
As of March 31, 2026, the majority of our share-based compensation plans were classified as cash-settled and will be impacted by changes in our share price. Although accounted for as cash-settled, Precision retains the ability to settle certain vested units in common shares at its discretion.
7
Depreciation
In 2025, we completed a detailed review of our drilling rig equipment and revised the estimated useful life of drill pipe as more complex drilling programs have reduced the useful life of this asset class. This revision resulted in additional depreciation expense of $11 million in the first quarter of 2026.
LIQUIDITY AND CAPITAL RESOURCES
The oilfield services business is inherently cyclical in nature. To manage this, we focus on maintaining a strong balance sheet in order to have the financial flexibility to manage our growth and cash flow regardless of where we are in the business cycle. We maintain a variable operating cost structure so we can be responsive to changes in demand.
Our maintenance capital expenditures are tightly governed and highly responsive to activity levels with additional cost savings leverage provided through our internal manufacturing and supply divisions. Term contracts on upgrade or expansion capital projects provide more certainty of future revenues and return on our capital investments.
Liquidity
| Amount | Availability | Used for | Maturity | |||
| Senior Credit Facility (secured) | ||||||
| US$375 million (extendible, revolving term credit facility with US$375 million accordion feature) |
US$80 million and $3 million drawn with US$51 million in outstanding letters of credit | General corporate purposes | October 31, 2028(1) | |||
| Operating facilities (secured) | ||||||
| $40 million | Undrawn, except $7 million in outstanding letters of credit |
Letters of credit and general corporate purposes |
||||
| US$15 million | Undrawn | Short-term working capital requirements |
||||
| Demand letter of credit facility (secured) | ||||||
| US$40 million | Undrawn, except US$31 million in outstanding letters of credit |
Letters of credit | ||||
| Unsecured senior notes (unsecured) | ||||||
| US$400 million – 6.875% | Fully drawn | Debt redemption and repurchases | January 15, 2029 |
| (1) | US$43 million will expire on June 28, 2027. |
In the first quarter of 2026, we reduced long-term debt by $25 million, by repaying Canadian dollar denominated borrowings under our Senior Credit Facility. As of March 31, 2026, we had a total of $671 million outstanding under our Senior Credit Facility and unsecured senior notes as compared with $687 million at December 31, 2025. The current blended cash interest cost of our debt is approximately 6.6%.
Senior Credit Facility
Our Senior Credit Facility requires that we comply with certain covenants including a leverage ratio of consolidated senior debt to consolidated Covenant EBITDA of less than 2.5:1. For purposes of calculating the leverage ratio, consolidated senior debt only includes secured indebtedness. The Senior Credit Facility limits the redemption and repurchase of junior debt subject to a pro forma senior net leverage covenant test of less than or equal to 1.75:1.
Unsecured Senior Notes
The unsecured senior notes require that we comply with certain restrictive and financial covenants, including an incurrence based consolidated interest coverage ratio test of consolidated cash flow, as defined in the senior note agreements, to consolidated interest expense of greater than 2.0:1 for the most recent four consecutive fiscal quarters. In the event our consolidated interest coverage ratio is less than 2.0:1 for the most recent four consecutive fiscal quarters, the unsecured senior notes restrict our ability to incur additional indebtedness.
8
Covenants
As at March 31, 2026, we were in compliance with the covenants of our Senior Credit Facility.
| Covenant | At March 31, 2026 | |||||||
| Senior Credit Facility | ||||||||
| Consolidated senior debt to consolidated covenant EBITDA(1) | <2.50 | 0.23 | ||||||
| Consolidated covenant EBITDA to consolidated interest expense | >2.50 | 9.87 |
| (1) | For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness. |
Impact of foreign exchange rates
The following table summarizes the average and closing Canada-U.S. foreign exchanges rates.
| For the three months ended March 31, | At December 31, | |||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Canada-U.S. foreign exchange rates | ||||||||||||
| Average | 1.37 | 1.44 | — | |||||||||
| Closing | 1.39 | 1.44 | 1.37 | |||||||||
Hedge of investments in foreign operations
We utilize foreign currency long-term debt to hedge our exposure to changes in the carrying value of our net investment in certain foreign operations as a result of changes in foreign exchange rates.
We have designated our U.S. dollar-denominated long-term debt as a net investment hedge in our U.S. operations and other foreign operations that have a U.S. dollar functional currency. To be accounted for as a hedge, the foreign currency denominated long-term debt must be designated and documented as such and must be effective at inception and on an ongoing basis. We recognize the effective amount of this hedge (net of tax) in other comprehensive income. We recognize ineffective amounts (if any) in net earnings.
Shareholders Capital
| April 29, 2026 | March 31, 2026 | March 31, 2025 | ||||||||||
| Shares outstanding | 12,941,241 | 12,948,475 | 13,523,169 | |||||||||
| Deferred shares outstanding | 9,737 | 9,737 | 6,118 | |||||||||
| Share options outstanding | — | — | 11,262 |
QUARTERLY FINANCIAL SUMMARY
| (Stated in thousands of Canadian dollars, except per share amounts) | 2025 | 2026 | ||||||||||||||
| Quarters ended | June 30 | September 30 | December 31 | March 31 | ||||||||||||
| Revenue | 406,615 | 462,250 | 478,508 | 526,051 | ||||||||||||
| Adjusted EBITDA(1) | 108,100 | 117,632 | 126,386 | 123,947 | ||||||||||||
| Net earnings (loss) attributable to shareholders | 16,267 | (6,761 | ) | (42,175 | ) | 17,376 | ||||||||||
| Net earnings (loss) attributable to shareholders per basic share | 1.21 | (0.51 | ) | (3.23 | ) | 1.34 | ||||||||||
| Net earnings (loss) attributable to shareholders per diluted share | 1.07 | (0.51 | ) | (3.23 | ) | 1.34 | ||||||||||
| Cash provided by operations | 147,495 | 75,869 | 126,114 | 63,154 | ||||||||||||
| (Stated in thousands of Canadian dollars, except per share amounts) | 2024 | 2025 | ||||||||||||||
| Quarters ended | June 30 | September 30 | December 31 | March 31 | ||||||||||||
| Revenue | 429,214 | 477,155 | 468,171 | 496,331 | ||||||||||||
| Adjusted EBITDA(1) | 115,121 | 142,425 | 120,526 | 137,497 | ||||||||||||
| Net earnings attributable to shareholders | 20,701 | 39,183 | 14,795 | 34,511 | ||||||||||||
| Net earnings attributable to shareholders per basic share | 1.44 | 2.77 | 1.06 | 2.52 | ||||||||||||
| Net earnings attributable to shareholders per diluted share | 1.44 | 2.31 | 1.06 | 2.20 | ||||||||||||
| Cash provided by operations | 174,075 | 79,674 | 162,791 | 63,419 | ||||||||||||
| (1) | See "FINANCIAL MEASURES AND RATIOS." |
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Because of the nature of our business, we are required to make judgements and estimates in preparing our Condensed Consolidated Interim Financial Statements that could materially affect the amounts recognized. Our judgements and estimates are based on our past experiences and assumptions we believe are reasonable in the circumstances. The critical judgements and estimates used in preparing the Condensed Consolidated Interim Financial Statements are described in our 2025 Annual Report.
9
CHANGE IN ACCOUNTING POLICY
Effective January 1, 2026, Precision has prospectively adopted Amendments to the Classification and Measurement of Financial Instruments, as issued May 2024. The amendments relate to IFRS 7 Financial Instruments: Disclosures and IFRS 9 Financial Instruments. The amendments clarify the timing of recognition and derecognition of financial assets and liabilities. The amendments require opening balances of financial assets, financial liabilities, and retained earnings be adjusted to recognize the effect of the initial application if retrospective application is not selected. The initial application did not result in a material impact to the financial statements.
EVALUATION OF CONTROLS AND PROCEDURES
Based on their evaluation as at December 31, 2025, Precision’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1934, as amended (the Exchange Act)), were effective to ensure that information required to be disclosed by the Corporation in reports that are filed or submitted to Canadian and U.S. securities authorities is recorded, processed, summarized and reported within the time periods specified in Canadian and U.S. securities laws. In addition, as of March 31, 2026, there were no changes in the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting. Management will continue to periodically evaluate the Corporation’s disclosure controls and procedures and internal control over financial reporting and will make any modifications from time to time as deemed necessary.
Based on their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements, and even those controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
10
FINANCIAL MEASURES AND RATIOS
Non-GAAP Financial Measures
| ||
We reference certain additional Non-Generally Accepted Accounting Principles (Non-GAAP) measures that are not defined terms under IFRS Accounting Standards to assess performance because we believe they provide useful supplemental information to investors.
| ||
| Adjusted EBITDA |
We believe Adjusted EBITDA (earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings and our reportable operating segment disclosures, is a useful measure because it gives an indication of the results from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.
The most directly comparable financial measure is net earnings. | |
| For the three months ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Adjusted EBITDA by segment: | ||||||||
| Contract Drilling Services | 132,995 | 136,016 | ||||||
| Completion and Production Services | 17,612 | 17,546 | ||||||
| Corporate and Other | (26,660 | ) | (16,065 | ) | ||||
| Adjusted EBITDA | 123,947 | 137,497 | ||||||
| Depreciation and amortization | 84,330 | 75,036 | ||||||
| Gain on asset disposals | (1,713 | ) | (2,872 | ) | ||||
| Foreign exchange | 448 | 367 | ||||||
| Finance charges | 12,356 | 15,760 | ||||||
| (Gain) loss on investments and other assets | 1,467 | (49 | ) | |||||
| Income taxes | 9,214 | 14,308 | ||||||
| Net earnings | 17,845 | 34,947 | ||||||
| Non-controlling interest | 469 | 436 | ||||||
| Net earnings attributable to shareholders | 17,376 | 34,511 | ||||||
| Net Capital Spending |
We believe net capital spending is a useful measure as it provides an indication of our primary investment activities.
The most directly comparable financial measure is cash provided by (used in) investing activities.
Net capital spending is calculated as follows: |
| For the three months ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Capital spending by spend category | ||||||||
| Expansion and upgrade | 30,274 | 19,546 | ||||||
| Maintenance, infrastructure and intangibles | 34,726 | 40,419 | ||||||
| Capital expenditures | 65,000 | 59,965 | ||||||
| Proceeds on sale of property, plant and equipment | (2,287 | ) | (3,765 | ) | ||||
| Net capital spending | 62,713 | 56,200 | ||||||
| Purchase of investments and other assets | 698 | 11 | ||||||
| Receipt of finance lease payments | (251 | ) | (208 | ) | ||||
| Changes in non-cash working capital balances | 11,542 | 1,199 | ||||||
| Cash used in investing activities | 74,702 | 57,202 | ||||||
11
| Working Capital |
We define working capital as current assets less current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.
Working capital is calculated as follows: |
| March 31, | December 31, | |||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Current assets | 505,033 | 486,915 | ||||||
| Current liabilities | (296,934 | ) | (300,100 | ) | ||||
| Working capital | 208,099 | 186,815 |
| Total Long-term Financial Liabilities |
We define total long-term financial liabilities as total non-current liabilities less deferred tax liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.
Total long-term financial liabilities is calculated as follows: |
| March 31, | December 31, | |||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Total non-current liabilities | 827,942 | 837,707 | ||||||
| Deferred tax liabilities | (99,690 | ) | (90,763 | ) | ||||
| Total long-term financial liabilities | 728,252 | 746,944 |
Non-GAAP Ratios
| ||
We reference certain additional Non-GAAP ratios that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
| ||
| Adjusted EBITDA % of Revenue | We believe Adjusted EBITDA as a percentage of consolidated revenue, as reported in our Condensed Interim Consolidated Statements of Net Earnings, provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges. | |
| Long-term debt to long-term debt plus equity | We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage. | |
| Net Debt to Adjusted EBITDA | We believe that the Net Debt (long-term debt plus current portion of long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations. | |
| Supplementary Financial Measures | ||
| We reference certain supplementary financial measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors. | ||
| Capital Spending by Spend Category | We provide additional disclosure to better depict the nature of our capital spending. Our capital spending is categorized as expansion and upgrade, maintenance and infrastructure, or intangibles. | |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements contained in this report, including statements that contain words such as "could", "should", "can", "anticipate", "estimate", "intend", "plan", "expect", "believe", "will", "may", "continue", "project", "potential" and similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking information and statements").
12
In particular, forward-looking information and statements include, but are not limited to, the following:
| · | our 2026 strategic priorities; |
| · | our capital expenditures, free cash flow allocation and debt reduction plans for 2026 and beyond; |
| · | anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2026; |
| · | the average number of term contracts in place for 2026; |
| · | customer adoption of AlphaTM technologies and EverGreenTM suite of environmental solutions; and |
| · | potential commercial opportunities and rig contract renewals. |
These forward-looking information and statements are based on certain assumptions and analysis made by Precision in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. These include, among other things:
| · | our ability to react to customer spending plans as a result of changes in oil and natural gas prices; |
| · | the status of current negotiations with our customers and vendors; |
| · | customer focus on safety performance; |
| · | existing term contracts are neither renewed nor terminated prematurely; |
| · | continued market demand for our drilling rigs; |
| · | our ability to deliver rigs to customers on a timely basis; |
| · | the impact of an increase/decrease in capital spending; and |
| · | the general stability of the economic and political environments in the jurisdictions where we operate in. |
Undue reliance should not be placed on forward-looking information and statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks and uncertainties include, but are not limited to:
| · | volatility in the price and demand for oil and natural gas; |
| · | fluctuations in the level of oil and natural gas exploration and development activities; |
| · | fluctuations in the demand for contract drilling, well servicing and ancillary oilfield services; |
| · | our customers’ inability to obtain adequate credit or financing to support their drilling and production activity; |
| · | changes in drilling and well servicing technology, which could reduce demand for certain rigs or put us at a competitive advantage; |
| · | shortages, delays and interruptions in the delivery of equipment supplies and other key inputs; |
| · | liquidity of the capital markets to fund customer drilling programs; |
| · | availability of cash flow, debt and equity sources to fund our capital and operating requirements, as needed; |
| · | the physical, regulatory and transition impacts of climate change; |
| · | the impact of weather and seasonal conditions on operations and facilities; |
| · | the impact of tariffs and trade disputes; |
| · | competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services; |
| · | ability to improve our rig technology to improve drilling efficiency; |
| · | general economic, market or business conditions; |
| · | the availability of qualified personnel and management; |
| · | a decline in our safety performance which could result in lower demand for our services; |
| · | the impact of inflation and supply chain disruptions; |
| · | business interruptions related to cybersecurity risks; |
| · | changes in laws or regulations, including changes in environmental laws and regulations such as increased regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and greenhouse gas emissions, which could have an adverse impact on the demand for oil and natural gas; |
| · | terrorism, acts of war, social, civil and political unrest in the foreign jurisdictions or regions where we operate; |
| · | fluctuations in foreign exchange, interest rates and tax rates; and |
| · | other unforeseen conditions which could impact the use of services supplied by Precision and Precision’s ability to respond to such conditions. |
13
Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2025, which may be accessed on Precision’s SEDAR+ profile at www.sedarplus.ca or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this report are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.
14
Exhibit 99.2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
| (Stated in thousands of Canadian dollars) | March 31, 2026 | December 31, 2025 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 41,462 | $ | 85,781 | ||||
| Accounts receivable | 410,271 | 352,142 | ||||||
| Inventory | 53,300 | 48,992 | ||||||
| Total current assets | 505,033 | 486,915 | ||||||
| Non-current assets: | ||||||||
| Deferred tax assets | 2,235 | 2,235 | ||||||
| Property, plant and equipment | 2,159,598 | 2,159,212 | ||||||
| Intangibles | 8,581 | 9,470 | ||||||
| Right-of-use assets | 61,023 | 56,817 | ||||||
| Finance lease receivables | 4,244 | 4,474 | ||||||
| Investments and other assets | 7,440 | 7,567 | ||||||
| Total non-current assets | 2,243,121 | 2,239,775 | ||||||
| Total assets | $ | 2,748,154 | $ | 2,726,690 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 276,444 | $ | 280,652 | ||||
| Income taxes payable | 1,853 | 1,670 | ||||||
| Current portion of lease obligations | 18,637 | 17,778 | ||||||
| Total current liabilities | 296,934 | 300,100 | ||||||
| Non-current liabilities: | ||||||||
| Share-based compensation (Note 7) | 8,034 | 13,780 | ||||||
| Provisions and other | 6,781 | 6,704 | ||||||
| Lease obligations | 49,578 | 47,169 | ||||||
| Long-term debt (Note 5) | 663,859 | 679,291 | ||||||
| Deferred tax liabilities | 99,690 | 90,763 | ||||||
| Total non-current liabilities | 827,942 | 837,707 | ||||||
| Total liabilities | 1,124,876 | 1,137,807 | ||||||
| Equity: | ||||||||
| Shareholders’ capital (Note 8) | 2,245,234 | 2,238,766 | ||||||
| Contributed surplus | 77,831 | 79,270 | ||||||
| Accumulated other comprehensive income | 174,350 | 165,020 | ||||||
| Deficit | (879,253 | ) | (898,992 | ) | ||||
| Total equity attributable to shareholders | 1,618,162 | 1,584,064 | ||||||
| Non-controlling interest | 5,116 | 4,819 | ||||||
| Total equity | 1,623,278 | 1,588,883 | ||||||
| Total liabilities and equity | $ | 2,748,154 | $ | 2,726,690 | ||||
See accompanying notes to condensed interim consolidated financial statements.
| 1 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars, except per share amounts) | 2026 | 2025 | ||||||
| Revenue (Note 3) | $ | 526,051 | $ | 496,331 | ||||
| Expenses: | ||||||||
| Operating | 360,359 | 329,068 | ||||||
| General and administrative | 41,745 | 29,766 | ||||||
| Earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 123,947 | 137,497 | ||||||
| Depreciation and amortization | 84,330 | 75,036 | ||||||
| Gain on asset disposals | (1,713 | ) | (2,872 | ) | ||||
| Foreign exchange | 448 | 367 | ||||||
| Finance charges (Note 6) | 12,356 | 15,760 | ||||||
| (Gain) loss on investments and other assets | 1,467 | (49 | ) | |||||
| Earnings before income taxes | 27,059 | 49,255 | ||||||
| Income taxes: | ||||||||
| Current | 702 | 1,106 | ||||||
| Deferred | 8,512 | 13,202 | ||||||
| 9,214 | 14,308 | |||||||
| Net earnings | $ | 17,845 | $ | 34,947 | ||||
| Attributable to: | ||||||||
| Shareholders of Precision Drilling Corporation | $ | 17,376 | $ | 34,511 | ||||
| Non-controlling interest | $ | 469 | $ | 436 | ||||
| Net earnings per share attributable to share- holders of Precision Drilling Corporation (Note 9): | ||||||||
| Basic | $ | 1.34 | $ | 2.52 | ||||
| Diluted | $ | 1.34 | $ | 2.20 | ||||
See accompanying notes to condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Net earnings | $ | 17,845 | $ | 34,947 | ||||
| Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency | 18,244 | (658 | ) | |||||
| Foreign exchange loss on net investment hedge with U.S. denominated debt | (8,914 | ) | (535 | ) | ||||
| Comprehensive income | $ | 27,175 | $ | 33,754 | ||||
| Attributable to: | ||||||||
| Shareholders of Precision Drilling Corporation | $ | 26,706 | $ | 33,318 | ||||
| Non-controlling interest | $ | 469 | $ | 436 | ||||
See accompanying notes to condensed interim consolidated financial statements.
| 2 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (Stated in thousands of Canadian dollars) | 2026 | 2025 | ||||||
| Cash provided by (used in): | ||||||||
| Operations: | ||||||||
| Net earnings | $ | 17,845 | $ | 34,947 | ||||
| Adjustments for: | ||||||||
| Long-term compensation plans | 9,261 | 3,016 | ||||||
| Depreciation and amortization | 84,330 | 75,036 | ||||||
| Gain on asset disposals | (1,713 | ) | (2,872 | ) | ||||
| Foreign exchange | 554 | (783 | ) | |||||
| Finance charges | 12,356 | 15,760 | ||||||
| Income taxes | 9,214 | 14,308 | ||||||
| Other | (13 | ) | — | |||||
| (Gain) loss on investments and other assets | 1,467 | (49 | ) | |||||
| Income taxes paid | (342 | ) | (321 | ) | ||||
| Interest paid | (21,991 | ) | (29,637 | ) | ||||
| Interest received | 424 | 437 | ||||||
| Funds provided by operations | 111,392 | 109,842 | ||||||
| Changes in non-cash working capital balances | (48,238 | ) | (46,423 | ) | ||||
| Cash provided by operations | 63,154 | 63,419 | ||||||
| Investments: | ||||||||
| Purchase of property, plant and equipment | (65,000 | ) | (59,965 | ) | ||||
| Proceeds on sale of property, plant and equipment | 2,287 | 3,765 | ||||||
| Purchase of investments and other assets | (698 | ) | (11 | ) | ||||
| Receipt of finance lease payments | 251 | 208 | ||||||
| Changes in non-cash working capital balances | (11,542 | ) | (1,199 | ) | ||||
| Cash used in investing activities | (74,702 | ) | (57,202 | ) | ||||
| Financing: | ||||||||
| Issuance of long-term debt | 3,000 | — | ||||||
| Repayment of long-term debt | (28,000 | ) | (17,110 | ) | ||||
| Repurchase of share capital (Note 8) | (4,015 | ) | (30,766 | ) | ||||
| Issuance of common shares from the exercise of options | 195 | — | ||||||
| Distributions to non-controlling interest | (300 | ) | — | |||||
| Lease payments | (4,093 | ) | (3,587 | ) | ||||
| Cash used in financing activities | (33,213 | ) | (51,463 | ) | ||||
| Effect of exchange rate changes on cash | 442 | (280 | ) | |||||
| Decrease in cash | (44,319 | ) | (45,526 | ) | ||||
| Cash, beginning of period | 85,781 | 73,771 | ||||||
| Cash, end of period | $ | 41,462 | $ | 28,245 | ||||
See accompanying notes to condensed interim consolidated financial statements.
| 3 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| Attributable to shareholders of the Corporation | ||||||||||||||||||||||||||||
| (Stated in thousands of Canadian dollars) | Shareholders’ Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total | Non- Controlling Interest | Total Equity | |||||||||||||||||||||
| Balance at January 1, 2026 | $ | 2,238,766 | $ | 79,270 | $ | 165,020 | $ | (898,992 | ) | $ | 1,584,064 | $ | 4,819 | $ | 1,588,883 | |||||||||||||
| Net earnings for the period | — | — | — | 17,376 | 17,376 | 469 | 17,845 | |||||||||||||||||||||
| Other comprehensive income for the period | — | — | 9,330 | — | 9,330 | — | 9,330 | |||||||||||||||||||||
| Share options exercised | 279 | (84 | ) | — | — | 195 | — | 195 | ||||||||||||||||||||
| Settlement of Executive Performance and Restricted Share Units | 4,095 | (4,095 | ) | — | — | — | — | — | ||||||||||||||||||||
| Distributions to non-controlling interest | — | — | — | — | — | (172 | ) | (172 | ) | |||||||||||||||||||
| Share repurchases (Note 8) | (6,378 | ) | — | — | 2,363 | (4,015 | ) | — | (4,015 | ) | ||||||||||||||||||
| Liability reversal for automated share purchase plan (Note 8) | 10,000 | — | — | — | 10,000 | — | 10,000 | |||||||||||||||||||||
| Liability for automated share purchase plan (Note 8) | (1,700 | ) | — | — | — | (1,700 | ) | — | (1,700 | ) | ||||||||||||||||||
| Redemption of non-management directors share units | 172 | (172 | ) | — | — | — | — | — | ||||||||||||||||||||
| Share-based compensation expense | — | 2,912 | — | — | 2,912 | — | 2,912 | |||||||||||||||||||||
| Balance at March 31, 2026 | $ | 2,245,234 | $ | 77,831 | $ | 174,350 | $ | (879,253 | ) | $ | 1,618,162 | $ | 5,116 | $ | 1,623,278 | |||||||||||||
| Attributable to shareholders of the Corporation | ||||||||||||||||||||||||||||
| (Stated in thousands of Canadian dollars) | Shareholders’ Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total | Non- Controlling Interest | Total Equity | |||||||||||||||||||||
| Balance at January 1, 2025 | $ | 2,301,729 | $ | 77,557 | $ | 199,020 | $ | (900,834 | ) | $ | 1,677,472 | $ | 4,527 | $ | 1,681,999 | |||||||||||||
| Net earnings for the period | — | — | — | 34,511 | 34,511 | 436 | 34,947 | |||||||||||||||||||||
| Other comprehensive income for the period | — | — | (1,193 | ) | — | (1,193 | ) | — | (1,193 | ) | ||||||||||||||||||
| Settlement of Executive Performance and Restricted Share Units | 11,651 | (2,790 | ) | — | — | 8,861 | — | 8,861 | ||||||||||||||||||||
| Share repurchases | (31,141 | ) | — | — | — | (31,141 | ) | — | (31,141 | ) | ||||||||||||||||||
| Liability reversal for automated share purchase plan | 10,000 | — | — | — | 10,000 | — | 10,000 | |||||||||||||||||||||
| Liability for automated share purchase plan | (5,000 | ) | — | — | — | (5,000 | ) | — | (5,000 | ) | ||||||||||||||||||
| Redemption of non-management directors share units | 183 | (183 | ) | — | — | — | — | — | ||||||||||||||||||||
| Share-based compensation expense | — | 2,427 | — | — | 2,427 | — | 2,427 | |||||||||||||||||||||
| Balance at March 31, 2025 | $ | 2,287,422 | $ | 77,011 | $ | 197,827 | $ | (866,323 | ) | $ | 1,695,937 | $ | 4,963 | $ | 1,700,900 | |||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
| 4 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Tabular amounts are stated in thousands of Canadian dollars except share numbers and per share amounts)
NOTE 1. DESCRIPTION OF BUSINESS
Precision Drilling Corporation (Precision or the Corporation) is incorporated under the laws of the Province of Alberta, Canada and is a provider of contract drilling and completion and production services primarily to oil and natural gas and geothermal exploration and production companies in Canada, the United States and certain international locations.
NOTE 2. BASIS OF PRESENTATION
(a) Statement of Compliance
These condensed interim consolidated financial statements have been prepared based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
These condensed interim consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated annual financial statements of the Corporation as at and for the year ended December 31, 2025.
These condensed interim consolidated financial statements were prepared using accounting policies and application methods consistent with those used in the preparation of the Corporation’s consolidated annual financial statements for the year ended December 31, 2025, except as described in Note 2(c).
These condensed interim consolidated financial statements were approved by the Board of Directors on April 29, 2026.
(b) Use of Estimates and Judgements
The preparation of the condensed interim consolidated financial statements requires management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingencies. These estimates and judgements are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The estimation of anticipated future events involves uncertainty and, consequently, the estimates used in preparation of the condensed interim consolidated financial statements may change as future events unfold, more experience is acquired, or the Corporation’s operating environment changes.
Significant estimates and judgements used in the preparation of these condensed interim consolidated financial statements remained unchanged from those disclosed in the Corporation’s consolidated annual financial statements for the year ended December 31, 2025.
The impacts of geopolitical events, such as the imposed tariffs between Canada and the U.S., regional conflicts, especially in oil producing areas, can materially impact energy markets, interest and inflation rates, and supply chains, resulting in higher levels of volatility and uncertainty. Ongoing U.S. military operations involving Iran and the resulting conflict in the Middle East have impacted global oil supply and increased volatility in global oil prices. Management has, to the extent reasonable, incorporated known facts and circumstances into the estimates made, however, actual results could differ from those estimates and those differences could be material.
(c) Change in Accounting Policy
Effective January 1, 2026, the Corporation has prospectively adopted Amendments to the Classification and Measurement of Financial Instruments, as issued May 2024. The amendments relate to IFRS 7 Financial Instruments: Disclosures and IFRS 9 Financial Instruments. The amendments clarify the timing of recognition and derecognition of financial assets and liabilities. The amendments require opening balances of financial assets, financial liabilities, and retained earnings be adjusted to recognize the effect of the initial application if retrospective application is not selected. The initial application did not result in a material impact to the financial statements. The Corporation has applied the election related to electronic payment systems.
| 5 |
NOTE 3. Revenue
| (a) | Disaggregation of revenue |
The following table includes a reconciliation of disaggregated revenue by reportable segment. Revenue has been disaggregated by primary geographical market and type of service provided.
| Three Months Ended March 31, 2026 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Canada | $ | 251,833 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 328,875 | |||||||||
| United States | 153,936 | — | — | — | 153,936 | |||||||||||||||
| International | 43,240 | — | — | — | 43,240 | |||||||||||||||
| $ | 449,009 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 526,051 | ||||||||||
| Day rate/hourly services | $ | 437,939 | $ | 79,931 | $ | — | $ | (900 | ) | $ | 516,970 | |||||||||
| Shortfall payments/idle but contracted | — | — | — | — | — | |||||||||||||||
| Turnkey drilling services | 8,453 | — | — | — | 8,453 | |||||||||||||||
| Other | 2,617 | — | — | (1,989 | ) | 628 | ||||||||||||||
| $ | 449,009 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 526,051 | ||||||||||
| Three Months Ended March 31, 2025 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Canada | $ | 240,437 | $ | 77,681 | $ | — | $ | (2,456 | ) | $ | 315,662 | |||||||||
| United States | 127,933 | 1,649 | — | — | 129,582 | |||||||||||||||
| International | 51,087 | — | — | — | 51,087 | |||||||||||||||
| $ | 419,457 | $ | 79,330 | $ | — | $ | (2,456 | ) | $ | 496,331 | ||||||||||
| Day rate/hourly services | $ | 411,935 | $ | 79,330 | $ | — | $ | (628 | ) | $ | 490,637 | |||||||||
| Shortfall payments/idle but contracted | 4,896 | — | — | — | 4,896 | |||||||||||||||
| Turnkey drilling services | — | — | — | — | — | |||||||||||||||
| Other | 2,626 | — | — | (1,828 | ) | 798 | ||||||||||||||
| $ | 419,457 | $ | 79,330 | $ | — | $ | (2,456 | ) | $ | 496,331 | ||||||||||
| (b) | Seasonality |
Precision has operations that are carried on in Canada which represent approximately 63% (2025 – 64%) of consolidated revenue for the three months ended March 31, 2026 and 44% (March 31, 2025 – 42%) of consolidated total assets as at March 31, 2026. The ability to move heavy equipment in Canadian oil and natural gas fields is dependent on weather conditions. As warm weather returns in the spring, the winter's frost comes out of the ground rendering many secondary roads incapable of supporting the weight of heavy equipment until they have thoroughly dried out. The duration of this “spring break-up” has a direct impact on Precision’s activity levels. In addition, many exploration and production areas in northern Canada are accessible only in winter months when the ground is frozen hard enough to support equipment. The timing of freeze up and spring break-up affects the ability to move equipment in and out of these areas. As a result, late March through May is traditionally Precision’s slowest time in this region.
| 6 |
NOTE 4. SEGMENTED INFORMATION
The Corporation has two reportable operating segments; Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, procurement and distribution of oilfield supplies, and manufacture, sale and repair of drilling equipment. Completion and Production Services includes service rigs, oilfield equipment rental and camp services. The Corporation provides services primarily in Canada, the United States and certain international locations.
| Three Months Ended March 31, 2026 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Revenue | $ | 449,009 | $ | 79,931 | $ | — | $ | (2,889 | ) | $ | 526,051 | |||||||||
| Earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 132,995 | 17,612 | (26,660 | ) | — | 123,947 | ||||||||||||||
| Depreciation and amortization | 76,213 | 5,805 | 2,312 | — | 84,330 | |||||||||||||||
| (Gain) loss on asset disposals | (1,389 | ) | (333 | ) | 9 | — | (1,713 | ) | ||||||||||||
| Foreign exchange | 189 | (4 | ) | 263 | — | 448 | ||||||||||||||
| Finance charges | (141 | ) | 114 | 12,383 | — | 12,356 | ||||||||||||||
| Loss on investments and other assets | 644 | — | 823 | — | 1,467 | |||||||||||||||
| Income taxes (recovery) | (8,348 | ) | (176 | ) | 17,738 | — | 9,214 | |||||||||||||
| Net earnings (loss) for reportable segments | 65,827 | 12,206 | (60,188 | ) | — | 17,845 | ||||||||||||||
| Total assets | 2,403,332 | 246,662 | 98,160 | — | 2,748,154 | |||||||||||||||
| Capital expenditures | 61,838 | 2,375 | 787 | — | 65,000 | |||||||||||||||
| Three Months Ended March 31, 2025 | Contract Drilling Services | Completion and Production Services | Corporate and Other | Inter- Segment Eliminations | Total | |||||||||||||||
| Revenue | $ | 419,457 | $ | 79,330 | $ | — | $ | (2,456 | ) | $ | 496,331 | |||||||||
| Earnings before income taxes, (gain) loss on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 136,016 | 17,546 | (16,065 | ) | — | 137,497 | ||||||||||||||
| Depreciation and amortization | 67,021 | 5,565 | 2,450 | — | 75,036 | |||||||||||||||
| Gain on asset disposals | (1,289 | ) | (1,583 | ) | — | — | (2,872 | ) | ||||||||||||
| Foreign exchange | 155 | 34 | 178 | — | 367 | |||||||||||||||
| Finance charges | 100 | 101 | 15,559 | — | 15,760 | |||||||||||||||
| Gain on investments and other assets | — | — | (49 | ) | — | (49 | ) | |||||||||||||
| Income taxes (recovery) | (5,359 | ) | (159 | ) | 19,826 | — | 14,308 | |||||||||||||
| Net earnings for reportable segments | 75,388 | 13,588 | (54,029 | ) | — | 34,947 | ||||||||||||||
| Total assets | 2,534,573 | 247,807 | 133,604 | — | 2,915,984 | |||||||||||||||
| Capital expenditures | 56,863 | 2,986 | 116 | — | 59,965 | |||||||||||||||
| 7 |
NOTE 5. LONG-TERM DEBT
| U.S. Denominated Facilities | Canadian Facilities and Translated U.S. Facilities | |||||||||||||||
| March 31, | December 31, | March 31, | December 31, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Long-Term Debt | ||||||||||||||||
| Senior Credit Facility: | ||||||||||||||||
| U.S. Denominated Borrowings | US$ | 80,000 | US$ | 80,000 | $ | 111,295 | $ | 109,809 | ||||||||
| Canadian Denominated Borrowings | — | — | 3,000 | 28,000 | ||||||||||||
| Unsecured Senior Notes: | ||||||||||||||||
| 6.875% senior notes due 2029 | 400,000 | 400,000 | 556,472 | 549,044 | ||||||||||||
| US$ | 480,000 | US$ | 480,000 | 670,767 | 686,853 | |||||||||||
| Less net unamortized debt issue costs | (6,908 | ) | (7,562 | ) | ||||||||||||
| $ | 663,859 | $ | 679,291 | |||||||||||||
| Senior Credit Facility | Unsecured Senior Notes | Debt Issue Costs and Original Issue Discount | Total | |||||||||||||
| Long-term debt December 31, 2025 | 137,809 | 549,044 | (7,562 | ) | 679,291 | |||||||||||
| Changes from financing cash flows: | ||||||||||||||||
| Proceeds from Senior Credit Facility | 3,000 | — | — | 3,000 | ||||||||||||
| Repayment of Senior Credit Facility | (28,000 | ) | — | — | (28,000 | ) | ||||||||||
| 112,809 | 549,044 | (7,562 | ) | 654,291 | ||||||||||||
| Amortization of debt issue costs | — | — | 654 | 654 | ||||||||||||
| Foreign exchange adjustment | 1,486 | 7,428 | — | 8,914 | ||||||||||||
| Long-term debt March 31, 2026 | $ | 114,295 | $ | 556,472 | $ | (6,908 | ) | $ | 663,859 | |||||||
(a) Covenants
As at March 31, 2026, Precision was in compliance with the covenants of the Senior Credit Facility.
| Covenant | As at March 31, 2026 | |||||
| Senior Credit Facility | ||||||
| Consolidated senior debt to consolidated covenant EBITDA(1) | < 2.50 | 0.23 | ||||
| Consolidated covenant EBITDA to consolidated interest expense | > 2.50 | 9.87 | ||||
| (1) | For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness. |
NOTE 6. FINANCE CHARGES
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Interest: | ||||||||
| Long-term debt | $ | 11,372 | $ | 14,490 | ||||
| Lease obligations | 973 | 1,031 | ||||||
| Other | 140 | 17 | ||||||
| Income | (783 | ) | (499 | ) | ||||
| Amortization of debt issue costs, loan commitment fees and original issue discount | 654 | 721 | ||||||
| Finance charges | $ | 12,356 | $ | 15,760 | ||||
| 8 |
NOTE 7. SHARE-BASED COMPENSATION PLANS
(a) Liability Classified Plans
| Restricted Share Units | Performance Share Units | Non-Management Directors’ DSUs | Total | |||||||||||||
| December 31, 2025 | $ | 9,220 | $ | 17,513 | $ | 10,321 | $ | 37,054 | ||||||||
| Expensed during period(1) | 3,690 | 8,199 | 4,072 | 15,961 | ||||||||||||
| Payments and redemptions | (7,055 | ) | (7,965 | ) | — | (15,020 | ) | |||||||||
| Foreign exchange | (20 | ) | (2 | ) | — | (22 | ) | |||||||||
| March 31, 2026 | $ | 5,835 | $ | 17,745 | $ | 14,393 | $ | 37,973 | ||||||||
| Current(2) | $ | 4,486 | $ | 11,060 | $ | 14,393 | $ | 29,939 | ||||||||
| Long-term | 1,349 | 6,685 | — | 8,034 | ||||||||||||
| $ | 5,835 | $ | 17,745 | $ | 14,393 | $ | 37,973 | |||||||||
| (1) | For the three months ended March 31, 2026, $12,198 is included in General and administrative expenses and $3,763 in Operating expenses. |
| (2) | The current portion of the share-based compensation liability is included in Accounts payable and accrued liabilities. |
Restricted Share Units and Performance Share Units
A summary of the activity under the Restricted Share Unit (RSU) and the Performance Share Unit (PSU) plans are presented below:
| RSUs Outstanding | PSUs Outstanding | |||||||
| December 31, 2025 | 132,279 | 310,932 | ||||||
| Granted | 46,810 | 95,741 | ||||||
| Redeemed | (63,411 | ) | (83,416 | ) | ||||
| Forfeited | (2,833 | ) | (2,370 | ) | ||||
| March 31, 2026 | 112,845 | 320,887 | ||||||
Non-Management Directors – Deferred Share Units Plan
A summary of the activity under the non-management director Deferred Share Unit (DSU) plan is presented below:
| DSUs Outstanding | ||||
| December 31, 2025 | 104,799 | |||
| Granted | 340 | |||
| March 31, 2026 | 105,139 | |||
(b) Equity Settled Plans
Executive Restricted Share Units Plan
Precision granted Executive RSUs to certain senior executives with the intention of settling them in voting shares of the Corporation either issued from treasury or purchased in the open market. Granted units vest annually over a three-year term.
| Executive RSUs Outstanding | Weighted Average Fair Value | |||||||
| December 31, 2025 | 128,430 | $ | 81.63 | |||||
| Granted | 70,205 | 122.22 | ||||||
| Redeemed | (48,865 | ) | 84.21 | |||||
| Forfeited | (693 | ) | 80.09 | |||||
| March 31, 2026 | 149,077 | $ | 99.91 | |||||
| 9 |
Included in net earnings for the three months ended March 31, 2026 were expenses of $2 million (2025 – $2 million).
Non-Management Directors – Deferred Share Unit Plans
A summary of the activity under the non-management director DSU plans is presented below:
| Deferred share units | Outstanding- 2012 Plan | Outstanding- 2024 Plan | ||||||
| December 31, 2025 | 1,470 | 7,343 | ||||||
| Granted | — | 2,284 | ||||||
| Redeemed | — | (1,360 | ) | |||||
| March 31, 2026 | 1,470 | 8,267 | ||||||
Included in net earnings for the three months ended March 31, 2026 were expenses of $1 million (2025 – $1 million).
NOTE 8. SHAREHOLDERS’ CAPITAL
| Common shares | Shares | Amount | ||||||
| December 31, 2025 | 12,932,399 | $ | 2,238,766 | |||||
| Reversal of share repurchase liability — December 31, 2025 | — | 10,000 | ||||||
| Share repurchase liability — March 31, 2026 | — | (1,700 | ) | |||||
| Settlement of PSUs and RSUs | 48,865 | 4,095 | ||||||
| Share options exercised | 2,725 | 279 | ||||||
| Share repurchases | (36,874 | ) | (6,378 | ) | ||||
| Redemption of non-management directors share units | 1,360 | 172 | ||||||
| March 31, 2026 | 12,948,475 | $ | 2,245,234 | |||||
(a) Normal Course Issuer Bid
For the quarter ended March 31, 2026, Precision repurchased and cancelled a total of 36,874 (2025 – 408,973) common shares for $4 million (2025 – $31 million) and recorded nil (2025 - $0.4 million) Canadian share buy back tax. During the first quarter of 2026, Precision revised its year end estimate of share repurchase activity based on actual repurchases completed in the quarter. Repurchases are dependent on share price during the period. The change in accounting estimate has been applied prospectively. As a result of the difference between the original estimated liability and actual share repurchase activity during the quarter, share capital increased by $6 million in the quarter.
(b) Automated Share Purchase Plan
Prior to March 31, 2026, Precision entered into an Automated Share Purchase Plan (ASPP) with an independent broker to permit the repurchase of common shares during its internal blackout period. The volume of purchases is determined by the broker in its sole discretion based on purchase price and maximum volume parameters established by the Corporation under the ASPP. The Corporation accrues a liability for purchases estimated to occur during the blackout period based on the parameters of the NCIB and the ASPP. As at March 31, 2026, Precision accrued a liability in accounts payable with a corresponding decrease to share capital of $2 million.
NOTE 9. PER SHARE AMOUNTS
The following tables reconcile net earnings and weighted average shares outstanding used in computing basic and diluted net earnings per share:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net earnings attributable to shareholders – basic | $ | 17,376 | $ | 34,511 | ||||
| Effect of share options and other equity compensation plans | — | (3,068 | ) | |||||
| Net earnings attributable to shareholders – diluted | $ | 17,376 | $ | 31,443 | ||||
| 10 |
| Three Months Ended March 31, | ||||||||
| (Stated in thousands) | 2026 | 2025 | ||||||
| Weighted average shares outstanding – basic | 12,932 | 13,683 | ||||||
| Effect of share options and other equity compensation plans(1) | 9 | 604 | ||||||
| Weighted average shares outstanding – diluted | 12,941 | 14,287 | ||||||
| (1) | For the three months ended March 31, 2026, 104,858 DSUs (2025 - nil) and all outstanding PSUs (2025 - nil) and RSUs (2025 - nil) were excluded from the calculation as their effect was anti-dilutive. |
NOTE 10. FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximates their fair value due to the relatively short period to maturity of the instruments. At the end of each reporting period, investments and other assets are measured at their estimated fair value, with changes in fair value recognized in profit or loss. Amounts drawn on the Senior Credit Facility, measured at amortized cost, approximate fair value as this indebtedness is subject to floating rates of interest and the interest rate swap is classified as a derivative fair valued through profit or loss. The fair value of the unsecured senior notes at March 31, 2026 was approximately $561 million (December 31, 2025 – $555 million).
Financial assets and liabilities recorded or disclosed at fair value in the consolidated statement of financial position are categorized based upon the level of judgement associated with the inputs used to measure their fair value. Hierarchical levels are based on the amount of subjectivity associated with the inputs in the fair value determination and are as follows:
Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
The estimated fair value of unsecured senior notes and interest rate swap is based on level II inputs. The fair value is estimated considering the risk-free interest rates on government debt instruments of similar maturities, adjusted for estimated credit risk, industry risk and market risk premiums.
| 11 |
|
SHAREHOLDER INFORMATION
STOCK EXCHANGE LISTINGS Shares of Precision Drilling Corporation are listed on the Toronto Stock Exchange under the trading symbol PD and on the New York Stock Exchange and NYSE Texas, Inc., under the trading symbol PDS.
TRANSFER AGENT AND REGISTRAR Computershare Trust Company of Canada Calgary, Alberta
TRANSFER POINT Computershare Trust Company NA Canton, Massachusetts
Q1 2026 TRADING PROFILE Toronto (TSX: PD) High: $143.81 Low: $96.95 Close: $136.90 Volume Traded: 5,789,428 New York (NYSE: PDS) High: US$103.80 Low: US$70.00 Close: US$98.40 Volume Traded: 8,056,167
ACCOUNT QUESTIONS Precision’s Transfer Agent can help you with a variety of shareholder related services, including: • change of address • lost unit certificates • transfer of shares to another person • estate settlement
Computershare Trust Company of Canada 100 University Avenue 9th Floor, North Tower Toronto, Ontario M5J 2Y1 Canada 1-800-564-6253 (toll free in Canada and the United States) 1-514-982-7555 (international direct dialing) Email: [email protected]
ONLINE INFORMATION To receive news releases by email, or to view this interim report online, please visit Precision’s website at www.precisiondrilling.com and refer to the Investor Relations section. Additional information relating to Precision, including the Annual Information Form, Annual Report and Management Information Circular has been filed with SEDAR+ and is available at www.sedarplus.ca and on the EDGAR website www.sec.gov |
CORPORATE INFORMATION
DIRECTORS William T. Donovan Carey T. Ford Steven W. Krablin Lori A. Lancaster Susan M. MacKenzie Kevin O. Meyers David W. Williams Alice L. Wong
OFFICERS Carey T. Ford President and Chief Executive Officer
Dustin D. Honing Chief Financial Officer
Thomas M. Alford President, Well Servicing
Veronica H. Foley Chief Legal & Compliance Officer
Shuja U. Goraya Chief Technology Officer
Darren J. Ruhr Chief Administrative Officer
Gene C. Stahl Chief Operating Officer
AUDITORS PricewaterhouseCoopers LLP Calgary, Alberta
HEAD OFFICE Suite 800, 525 8th Avenue SW Calgary, Alberta, T2P 1G1 Canada Telephone: 403-716-4500 Facsimile: 403-264-0251 Email: [email protected] www.precisiondrilling.com |
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