Precision Drilling Q2 Revenue Climbs 11% to $453M, but a $155M CRA Tax Reassessment Casts a Shadow

summarizeSummary

Precision Drilling posted Q2 2026 revenue of $453M (+11% YoY) and Adjusted EBITDA of $97M (-10%), while disclosing a CRA reassessment for 2018 with a potential $155M tax liability. A new Kuwait contract and improving U.S. rig activity were also announced.

check_boxKey Events · Earnings and Guidance · PDS

• Q2 Revenue Up 11%, But Net Loss

  Revenue climbed to $453 million from $407 million in Q2 2025, fueled by higher Canadian and U.S. activity. A net loss attributable to shareholders of $1 million, or $0.09 per share, compared to net earnings of $16 million a year ago, was primarily driven by an $11 million increase in depreciation expense from a change in useful life estimates.

• CRA Tax Reassessment – $155M Potential Liability

  The Canada Revenue Agency issued a Notice of Reassessment for the 2018 tax year, denying certain intercompany dividend deductions. Precision estimates a maximum tax liability of approximately $155 million, excluding interest. The company intends to contest the reassessment vigorously and has not recognized a liability, but will be required to pay 50% of the assessed tax and interest once reassessments are issued.

• New Kuwait Contract and U.S. Margin Outlook

  An additional five-year drilling rig contract was secured in Kuwait for an existing rig, which is expected to lift the international active rig count to eight by mid-2027. In the U.S., the active rig count has risen to 43, and Q4 margins are expected to approach US$10,000 per utilization day, up from US$6,212 in Q2.

• Debt Reduction and Share Buybacks Continue

  Long-term debt was reduced by $50 million in Q2 and $75 million year-to-date. The company repurchased 99,416 shares for $12 million in the quarter, as part of its plan to allocate up to 50% of free cash flow to shareholders.

auto_awesomeAnalysis · PDS · Energy & Transportation

Precision Drilling turned in solid Q2 operations, with revenue rising 11% to $453 million on the back of strong Canadian heavy oil activity and improving U.S. rig utilization. Yet Adjusted EBITDA slipped 10% to $97 million, pressured by higher reactivation costs and lower international margins. A net loss of $1 million stemmed largely from a non-cash depreciation charge tied to a change in useful life estimates. The real headline risk, however, is a Notice of Reassessment from the Canada Revenue Agency that denies certain intercompany dividend deductions for the 2018 tax year, carrying a potential maximum tax liability of approximately $155 million. While management intends to contest the reassessment vigorously and has not recognized a liability, the uncertainty—and the requirement to pay 50% of the assessed tax and interest upon reassessment—could strain liquidity and capital allocation plans. On the brighter side, the company secured a new five-year contract in Kuwait, expects U.S. margins to improve markedly by Q4, and continued its debt reduction and share buyback program. The market must now weigh strong operational momentum against a material tax contingency.