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Bullboard - Stock Discussion Forum Precision Drilling Corp T.PD

Alternate Symbol(s):  PDS

Precision Drilling Inc is a Canada-based drilling company. The Company is engaged in the exploration and production of oil and natural gas. Its services include North American drilling, international drilling, oilfield equipment rentals, camp & catering services. The Company technology includes AlphaAutomation, AlphaApps, AlphaAnalytics and EverGreen.

TSX:PD - Post Discussion

View:
Post by retiredcf on Mar 23, 2023 10:13am

RBC Notes

No question that they are the busiest driller. GLTA

March 22, 2023

Canadian Oilfield Services Trend Tracker 
WCSB rig count down 42 w/w to 167

Our view: This report serves as an update to the sector themes we track, including commodity prices, Western Canadian Sedimentary Basin (WCSB) activity trends, and E&P free cash flow and prioritization, all of which are inputs to our relative positioning and outlook for sector returns. Exhibits 16-17 highlight our valuation comparables, ratings, and price targets for the companies under coverage.

Canadian OFS stocks decreased 4% w/w, while WTI decreased 3% w/w

Canadian stocks under coverage decreased 3.9%, while Bal23 WTI decreased 3% w/w. The Bal23 Henry Hub strip decreased 6% w/w and is 40% below last year. The top three performers were SCL (+3.5%), PD (-1.4%), and SES (-1.7%). The bottom three performers were ESI (-4.7%), EFX (-9.0%), and CFW (-11.6%). Our Canadian Oilfield Services coverage group is down 18.6% YTD vs the S&P/TSX Capped Energy index down 8.8% YTD. For additional details on North American rig activity, please see here for the latest edition of our US rig tracker.

Rig count remains above historical levels; 1Q23 average 226 vs. RBC estimate of 218

The WCSB rig count has begun its seasonal spring break-up, driving large w/w declines in the rig count. Road bans are now coming into effect as the Alberta frost/thaw line makes its way North, as shown in Exhibit 20. The WCSB rig count decreased 42 w/w to 167. The current count sits 23 above 2022 levels and 49 above the 5-year average. PrivateCo rig counts decreased 11 w/w, Junior E&Ps (<25 mboe/d) decreased 2 rigs w/w, Intermediate E&Ps (25-75 mboe/d) decreased 1 rig w/w, Large E&Ps (>75 mboe/ d) decreased 23 rigs w/w.

Activity trends

• Montney ↓ 2 rigs week-over-week, to 55. The most active Montney operators include ARC (7 rigs), CNRL (5 rigs), and Ovintiv (5 rigs). The most active drillers in the Montney include Precision (22 rigs, 40% of total), Ensign (13 rigs, 24% of total), and Western (5 rigs, 9% of total).

• Deep Basin flat week-over-week, at 14. The most active Deep Basin operators include Tourmaline (6 rigs), Peyto (4 rigs), and Cenovus (2 rigs). The most active drillers in the Deep Basin include Ensign (8 rigs, 57% of total), Savanna (3 rigs, 21% of total), and Precision (3 rigs, 21% of total).

• Oil Sands ↓ 12 rigs week-over-week, to 12. The most active Oil Sands operators include Cenovus (6 rigs), CNRL (3 rigs), and ConocoPhillips (1 rig). The most active drillers in the Oil Sands include Precision (7 rigs, 58% of total), Ensign (3 rigs, 25% of total), and Akita (2 rigs, 17% of total).

• Other ↓ 8 rigs week-over-week, to 39. The most active Other operators include Tamarack (3 rigs), Tourmaline (3 rigs), and Aspenleaf (2 rigs). The most active drillers in the Other include Precision (11 rigs, 28% of total), Savanna (5 rigs, 13% of total), and Bonanza (4 rigs, 10% of total).

Our Canadian E&P analysts project stocks under coverage to generate $1.7/1.1Bn of post-dividend FCF in 2023/24 at the futures strip. Estimates imply operators will reinvest 65% of cash flow in 2023 at futures pricing (45% at RBC’s price deck), below the 5-year trailing average of 85%. Current estimates imply a 12% increase in capital spending y/y, as shown in Exhibit 15.

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