Precision Drilling Corporation (PDS)

PD ready to make next break-out move. The same movie has played out the last 3 quarters. PD shares sell-off after the quarter because investors are disappointed that EBITDA was not higher. But too many investors do not understand that as drillers reactivate rigs there is a large upfront cost - so the faster a driller brings back rigs (from idle) the worse the profits are in the current quarter, AND THAT IS A POSITIVE OVERALL. Or do I need to explain further? Then PD shares start the march back up because the direction of drilling demand is consistently rising and at better day rates. PD made the RIGHT DECISION to be firm on day rates and admitted they could have reactivated a few more rigs if they priced lower. But they do not need to - the demand for rigs will very soon far exceed the ability of the sector to reactivate. Hello - look at drilled, uncompleted inventory - gone from 8,500 to 5,500 in a year. Sometime in 2022 you need to drill a lot more wells to maintain current rate of well completions (as PD talked about). PD is smart to hold-out for a few more months to get way higher prices that will more than make up for having stayed a few more rigs idled now. PD's 2022 EBITDA outlook will be stupendous even with more rig activations (as those costs/base EBITDA will also be lower than it was in Q3).

Great results released today, as Kevin Neveu said "Precision executed on its 2018 business plan and delivered operating and financial results far exceeding our expectations." best part about strong year was it "resulted in better than expected cash flow, allowing us to accelerate our debt repayment plan well beyond our stated target range for the year, retiring $174 million of debt in 2018"- don't miss out on the next great play in the Canadian markets, check out SmallCapCanada for the companies that are showing strong signs of growth- they always deliver quality reports that are packed with insightful info and market analysis- just a great resource for any investor- SmallCapCanada

Direct quote from CEO:

"Under our recently announced capital allocation framework, we expect to surpass $1 billion of debt reduction, achieve leverage levels below 1.5 times and increase allocations DIRECTLY TO SHAREHOLDERS by the end of 2025."
Important to note DIRECTLY TO SHAREHOLDERS

This will rebound due to the following:
- PDs main source of income comes from well maintenance and workovers. Companies have been cutting these programs down to zero over the last 2 years because of the market. When market rebounds, all of the wells that have been sitting, will need to be turned onto production ASAP and PD will be scrambling to fill rigs.
- Canada is going hard on abandoned wells. All of the easy abandonments have been done, only medium to high risk abandonments left, which will require a service rig, and unlike the easy wells they have abandoned to help with their numbers in the past, a large number of the wells out there have major gas migration issue which can mean weeks of drilling out, cementing, testing, recementing, and even re-drilling of the wellbore. This is going to mean insane amounts of service work and PD is the largest service provider around.

I'm reposting Jim's post from the SU conversation. It is extremely interesting to understanding the price movement in oil yesterday:

$SU conversation
Short data: March18 ,2021

Today, Short sellers employed all of their tools in order to bring oil stocks and future contracts down.After failing to create a sell off in oil stocks ,they started to shorting April and May contacts for future oil.They brought WTI to 59$ from 64$.Biggest single drop since April2020.

As you see in below data, compare to share price drop, the volume was extremely low.
This volume does not match with share price drop.
That was just a pure and irresponsible manipulation.

Most media in the World censored this extraordinary event in capital market.
We are talking about tens of Billions of $ contracts and options which they are trying to kill them, plus covering their short position with creating fake sell off(scaring shareholders).

So far, we haven’t had sell off.Low volume.
They prefer spent and burn few billion dollars and sell stocks at discount, but meanwhile save tens of billions of money in other side.

Extreme and irresponsible manipulation which will have consequences in future of oil market ,especially in next OPEC+ meeting and their next policy.

Explanation about below data:
Vol: The total volume numbers of first hand shares which is coming into market for trading.It is different than total volume that you see in yahoo or elsewhere.Because in total volume one share can change many hands between traders.But original amount of coming shares and shorted shares are constant for day.

For Canadian Stocks the volume is just for US market.
SU : (Vol 2.326M shares), (Short 0.769M shares ), (33% of coming shares for trade)SU :
XOM (Vol 12M ), (Short 5.715M ), (48% )
CLR (Vol 1.129M ), (Short 0.703M ), (63% )
CVX (Vol 3.363M ), (Short 1.784M ), (53% )
OXY (Vol 8.277M ), (Short 5.32M ), (64% )
CPG (Vol 0.693M ), (Short 0.314M ), (45% )
CNQ (Vol 0.664M ), (Short 0.217M ), (33% )
ENB (Vol 0.885M ), (Short 0.57M ), (64% )
BP (Vol 3.458M ), (Short 1.265M ), (37% )
CVE (Vol 1.543M ), (Short 0.978M ), (64% )
CDEV (Vol 7.627M ), (Short 4.025M ), (53% )
FANG (Vol 1.087M ), (Short 0.505M ), (47% )
CPE (Vol 1.615M ), (Short 0.697M ), (43% )
MRO (Vol 10.09M ), (Short 5.662M ), (56% )
SLB (Vol 4.484M ), (Short 1.632M ), (36% )
HAL (Vol 2.948M ), (Short 0.971M ), (33% )
RIG (Vol 12.58M ), (Short 7.285M ), (58% )
TOT (Vol 0.553M ), (Short 0.378M ), (68% )
PXD (Vol 0.859M ), (Short 0.51M ), (60% )
COP (Vol 2.865M ), (Short 0.808M ), (28% )
BKR (Vol 1.79M ), (Short 0.659M ), (37% )
LPI (Vol 0.417M ), (Short 0.181M ), (44% )
PDS (Vol 0.054M ), (Short 0.02M ), (38% )

#XOM, #CLR , #CVX , #OXY , #CPG , #CNQ , #ENB , #BP , #CVE , #CDEV , #FANG , #CPE, #MRO , #SLB, #HAL, #RIG , #TOT, #PXD , #COP, #BKR , #LPI , #PDS