Colin Stewart Precision Drilling PD-T HOLD Feb 19, 2025

For his bullish natural gas outlook. 23% free cashflow yield, slightly more bullish next year at 28%. Pledged to return 35% of that to shareholders. He targets 116% upside from here. No dividend.

Modest multiple. Trades today at 22-23% free cashflow yield at modest activity levels; forward free cashflow yield of 26%. Offers strong optionality for better activity levels in 2025, predicated on higher nat gas price. No interest in services right now, so that's one of the best value propositions. No dividend.

Consolidating, as are a lot of stocks in the sector. Attempting to break out, wrestling with the older highs of $120. Longer term, likes oil. Hard to say if this one will break out. If you're patient, you'll probably be rewarded. But also a chance could tumble back into the trading tunnel. It's a flip of the coin.

Still constructive, especially after Q2 reporting. US activity and nat gas remain weak. US investors are buying because Canada's oil & gas industry is very, very strong. LNG Canada is a huge catalyst. Sees $185 target, or 93% upside from here.

The drilling business like the oil price has come under pressure. Short-term, exploration/drilling could be slower, while pipelines will continue to thrive. There needs to be a real, systemic increase in the oil price, otherwise PD will be rangebound.

Is a lower-risk version of Ensign given its healthier balance sheet as reflected in his higher valuation

Remember to buy a sector when it looks terrible, not when it's up 80-90%  ;)

Still likes it but not as much, as drilling is weaker than thought. Selloff in oil, drop in rig count. More efficient drilling ultimately means less work. Continues to de-lever. Everyone's excited about natural gas. Massive exposure to nat gas in Canada, which has better dynamics than US. About a 3.7% weight for him.

More drilling 'should' result in more activity for the service sector, of course. PD is very cheap and seeing fundamental improvement. We would be comfortable in the $76 to $77 range. 
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He exited at a profit. Services have been selling off when gas/oil was recently weak. The problem is that drillers have gotten too efficient. That said, this is looking tempting, trading at 3x EBITDA and 32% free cash flow yield.