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Take Advantage Of The Rally And Sell Precision Drilling

Aristofanis Papadatos profile picture
Aristofanis Papadatos


  • The stock of PDS has more than doubled this year thanks to the rally of the price of oil to a fresh 3-year high.
  • However, PDS has incurred excessive losses for seven consecutive years and it is still far from becoming profitable.
  • It also has a high debt load.

Stockbroker analyzes the financial chart

Avalon_Studio/E+ via Getty Images

The price of oil has rallied to a fresh 3-year high thanks to the recovery of the energy market from the pandemic and the discipline of OPEC and Russia. As a result, the stock of Precision Drilling (

This article was written by

Aristofanis Papadatos profile picture
I am a chemical engineer with a MS in Food Technology and Economics. I am also the author of 2 mathematics books ("Arithmetic calculations without a calculator" and "Word Problems") and perform almost all the calculations in my mind, without a calculator, making it easier to make immediate investing decisions among many alternatives. I invest applying fundamental and technical analysis and mainly use options as a tool for both investing and trading. I have nearly achieved my goal of early retirement, at the age of 45. In my spare time, I follow Warren Buffett's principle: "Some men read playboy. I read financial statements".

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

Jim Wallingford profile picture
That was a pretty good call, although a little early as the price hit $50 before the long slide to today's $35. The rig count continues to improve, although by inches, not yards. Up by 7 rigs in the US and 13 internationally with Canada at -1. They did have positive EBITDA for the trailing twelve months along with positive free cash flow. Debt is still too high with debt/equity at .97.
It's been nowhere but down over the last month. I'd resist bottom fishing and wait for a convincing upturn, a two or three day rally, for example.
Earnings estimates are still very negative although pointing to lower losses than 90 days ago. If the necessity for E&P companies to increase capex significantly over the next 2 years comes to pass, PDS will shine in spite of its shortcomings.
It is too soon to sell PDS. I think we need to see how they handle the next full year because they have been very responsible in living up to promises to reduce debt. And I do not think waiting one more year is too much to ask unless one is so heavily invested at lower prices that they see a reason to bail out or see value in taking a loss and have better options for the money.
@tewright2012 agree they have been solid and disciplined in the worst market ever with a lot of leverage going in. lmk if you find better options. Physical uranium maybe - That’s about it.
Company has generated ~$150 mill/yr CAD FCF through the downturn. $3.0 billion of great equipment. Stock was free on insolvency risk perceptions.
Next year at latest BS will be where they want it. What do you think they will do with growing FCF pile?
Market share gainer/ technology leader/ best run company. Incredibly cheap. Long.
@nobodybeatsthewiz they are buying back equity also. I would like to hang around another year for $60-$80 USD.
@dlekites yes- small because share repurchase is a low priority right now. I imagine that changes once under 2x leverage next year. Long suffering shareholders (including management) will be rewarded. Market not even sniffing it out yet. Merely reacting to oil and gas prices.
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