CALGARY — Precision Drilling Corp. says the outlook for its business is improving enough for it to reverse cuts to its capital spending program it had made amid economic uncertainty earlier this year — and further increase it.
"While macro uncertainties persist, customer interest in gas-directed drilling has taken shape with several operators planning to expand drilling programs with Precision, and this is very encouraging," said Kevin Neveu, chief executive of the Calgary-based oil and gas driller.
During the first quarter, Precision cut $25 million from its capital spending program to $200 million due to a possible dip in demand from the producers that contract its rigs.
That included a cut in upgrade spending that had acted as a “placeholder” in Precision’s budget for potential projects in its U.S. or international divisions, as well as maintenance capital earmarked to take advantage of year-end vendor discounts.
"Since then, firm customer demand, supported by term contracts, increased rates on some contracted rigs and customer prepayments have encouraged us to restore the $25 million of upgrades, and we've identified an additional $15 million of further good upgrade investment opportunities," said Neveu.
Precision's 2025 capital budget now sits at $240 million.
The startup in June of the LNG Canada export facility is also contributing to optimism for Precision, he added. The plant in Kitimat, B.C., chills western Canadian natural gas into a liquid state so that it can be shipped by specialized tanker to lucrative markets across the Pacific.
Neveu said some rigs may need to be moved from the United States to Canada to accommodate a surge in business north of the border.
Precision shares rose more than five per cent in Wednesday afternoon trading on the TSX to $76.34.
Late Tuesday, Precision said it booked net income of $16.5 million in its second quarter, down from $20.7 million in the same quarter last year.
The profit amounted to $1.07 per diluted share for the quarter ended June 30, down from $1.44 per diluted share in the same quarter last year.
Revenue totalled $406.6 million, down from $429.2 million in the second quarter of 2024.
The drop came as it averaged 33 active drilling rigs in the U.S. for the quarter compared with 36 for the second quarter of 2024. On the call, Neveu said 36 rigs are now operating in the U.S.
Meanwhile, Precision averaged 50 active drilling rigs in Canada for the quarter, compared with 49 a year earlier. The company's international operations averaged seven active drilling rigs for the quarter compared with eight in the second quarter of 2024.
Service rig operating hours for the quarter dropped 23 per cent compared with a year earlier on customer-driven project deferrals, weather impacts and lower U.S. activity.
This report by The Canadian Press was first published July 30, 2025.
Companies in this story: (TSX: PD)
Lauren Krugel, The Canadian Press
