Our view: We have a positive first impression of PD's 3Q23 results. Operating results significantly exceeded Street estimates, PD repaid $178MM debt, and returned $8MM cash to shareholders. We expect PD shares to trade ahead of land drilling peers in today's trading.
• Adj. EBITDAS above Street/RBC estimates. Adj. EBITDAS of $145MM (excluding $3MM SBC and including US$5MM idle but contracted revenue) was 18%/12% ($21MM/$15MM) above Street/RBC estimates. Results were primarily driven by higher revenues and slightly higher margins 34.0% vs Street 29.9% (RBC 31.2%). PD maintained its expectation to spend capex of $195MM in FY23 (RBC: $195MM), but highlighted there could be an increase in capital spend due to stronger demand for the company's services, along with customer contracted rig upgrades. PD repaid $178MM debt and has repaid $100MM YTD vs. its $150MM FY23 goal.
• Firming second half outlook across all regions. In 2Q, PD operated 51, 42, and 5 rigs in the USA, Canada, and International, respectively. The company currently has 43, 58, and 6 active in the same regions, respectively. After declining through 2Q, PD's US rig count has stabilized and the company has signed contracts for start-ups in 2H and FY24. In Canada, PD expects its Super Triple and Super Single fleets to be fully utilized. Internationally, PD's rig count should increase to 8 before the end of 3Q23, based on previously awarded contracts.
• Conference call today at 2:00 PM ET;