Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Precision Drilling Corporation (TSX: PD) is a leader in North American oil and gas services. It is a provider of contract drilling and completion and production services primarily to oil and natural gas exploration and production companies in Canada. Its segments are Contract Drilling Services which is the majority key revenue generator and other segments include Completion and Production Services. Kalkine’s Investor Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~31.76% of the total shareholding. Ninepoint Partners LP and Encompass Capital Advisors, LLC hold a maximum stake in the company at ~­­­9.59% and ~4.71%, respectively.

1.4 Key Metrics:

The company reported rising drilling rig utilization days from Canadian and International segment in Q1 2024 against pcp, which is a key positive. Furthermore, it clocked industry beating margin profile and decent debt to equity ratio along elevated cash flows, displaying its strength and adaptability in Q1 2024.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as an announcement regarding a rise in drilling activity and higher capital expenditure.

2.2 Insights on Q1 2024 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed an upside of ~7.75% and ~8.89% over the last 1 week and 1 month respectively. Moreover, the stock is trading above the average 52-week high price of CAD 104.90 and 52-week low price of CAD 56.42 providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV to Sales Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 26, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.