Issue #55

Two infrastructure giants are quietly building a high-tech monopoly on global drilling

The global energy resurgence isn’t being driven by a simple search for more oil—it is being decided by the "smart" technology and high-spec infrastructure that make extraction faster, cleaner, and more efficient than ever before. As the world balances immediate energy security with a long-term transition, two critical components have become the industry’s new gold standard:

the advanced automation software that optimizes every foot of a well, and the high-performance rig fleets capable of operating in the world’s harshest environments.

This is where the energy conversation shifts from simple commodity prices to high-tech infrastructure—and where the most resilient, dominant winners are emerging.

👉 One company has transformed from a traditional driller into a global tech powerhouse, slashing debt and becoming the indispensable partner for the world’s largest energy projects in the Middle East.

👉 The other is the undisputed leader of the North American landscape, leveraging a "digital brain" to outperform competitors and returning massive value to its shareholders.

👉 Both are highly profitable, technologically elite, and are currently receiving aggressive "Buy" ratings from Wall Street analysts.

In this edition, we break down the high-tech muscle and the automation intelligence powering the modern energy economy—and why these two stocks sit at the foundation of the next cycle of global energy growth.

Nabors Industries (NYSE: NBR)

Nabors Industries (NYSE: NBR) is a leading global provider of advanced technology for the energy industry and operates the world’s largest land-based drilling rig fleet. While traditionally known for its heavy-duty drilling rigs, the company has increasingly pivoted toward "smart" drilling solutions, automation, and energy transition technologies, positioning itself as a high-tech enabler for oil and gas producers globally.

Business Model and Revenue Streams 📦

Nabors operates through a diverse, technology-driven business model that spans the entire lifecycle of a well. Its primary revenue is generated by leasing its highly specialized drilling rigs and providing the technical expertise to operate them. The company categorizes its operations into several key segments:

• Global Drilling: This is the core engine of Nabors. It includes the "Lower 48" (U.S. land), International land (with a massive presence in Saudi Arabia via the SANAD joint venture), and offshore operations. Revenue is earned through daily "dayrates" paid by oil companies for rig usage.
• Nabors Drilling Solutions (NDS): This high-margin, "capex-light" segment focuses on software and automation. It provides tools that improve drilling efficiency, such as automated steering and performance analytics.
• Rig Technologies: Through its subsidiary Canrig, Nabors manufactures and sells drilling equipment and integrated systems to other drilling contractors, providing a secondary stream of industrial sales.

Macroeconomic Sensitivity

Nabors is highly sensitive to crude oil prices and global energy demand. However, recent geopolitical shifts—specifically the push for energy security—have benefited the company. While U.S. domestic activity has seen some softening due to consolidation among producers, Nabors' international segment (particularly in the Middle East) acts as a stabilizer. Macroeconomic policy changes, such as stricter carbon regulations, have also prompted the company to invest in "Nabors Energy Transition," focusing on geothermal and carbon-reduction technologies to future-proof its business.

Recent Performance and Corporate Developments 📈

Nabors reported transformative results in late 2025, marked by a massive shift in its balance sheet and a return to significant GAAP profitability.

Q3 2025 Financial Highlights: 💰

• Total Revenue: The company reported operating revenues of $818 million for Q3 2025.
• Net Profit: In a massive swing from previous quarters, Nabors reported a net income of $274 million ($16.85 per diluted share), largely bolstered by the strategic sale of its Quail Tools business.
• Debt Reduction: The sale of Quail Tools for $625 million allowed Nabors to slash its net debt to approximately $1.67 billion. This was a critical "de-risking" event that significantly lowered annual interest expenses.
• International Growth: The SANAD joint venture in Saudi Arabia remains a powerhouse, having deployed its 13th newbuild rig in late 2025, with more scheduled for 2026.

Strategic Initiatives and Mergers: 🤝

A major headline for late 2025 was the acquisition of Parker Wellbore for approximately $360 million. This merger is expected to close in early 2026. It adds high-margin tubular rental and repair services to Nabors' portfolio, further expanding its "capex-light" service offerings and strengthening its international footprint, particularly in the Eastern Hemisphere.

Profitability and Fair Value 🎯

After years of grappling with debt, Nabors has reached a turning point in its profitability profile.

• Paths to Profit: The company is focusing on "High-Spec" rigs (like the new PACE-X Ultra™), which command much higher dayrates. By pairing these rigs with Nabors Drilling Solutions (NDS) software, they generate more revenue per rig than traditional contractors.
• Fair Value: Nabors is often cited as significantly undervalued by fundamental analysts. While the stock has traded recently around $55, some DCF (Discounted Cash Flow) models suggest an intrinsic value significantly higher, potentially exceeding $200 if the company successfully executes its debt-reduction and international expansion plans. The market currently applies a "debt discount" to the stock, which is beginning to evaporate as the balance sheet cleans up.

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus has shifted toward a "Buy" or "Strong Buy" among several major firms in the last 30 days. Specifically, firms like Piper Sandler and Morgan Stanley have recently issued "Buy" ratings with price targets of $65.
• Price Target: The average 12-month price target currently sits around $57.63, though bullish analysts see a path toward $69.
• Bullish Sentiment: Institutional interest has spiked following the S&P Global Ratings upgrade of Nabors’ credit rating to 'B', acknowledging the company's aggressive and successful debt-reduction strategy.

Investor-Focused Takeaway: Is NBR Right for Your Portfolio?

Nabors is no longer just a "bet on oil prices." It is a bet on the technological evolution of the oilfield. With the Parker Wellbore acquisition and the massive growth of the SANAD venture in Saudi Arabia, Nabors is becoming a more global and service-oriented company.

What to Watch in the Near Term: 📈

1. Parker Wellbore Integration: Look for the realization of the projected $35 million in cost synergies following the merger close.
2. Middle East Rig Count: Monitor the continued deployment of newbuild rigs in Saudi Arabia, which provide stable, long-term cash flows.
3. Interest Expense: Watch for the continued "dollar-for-dollar" improvement in free cash flow as the company uses its new capital structure to lower interest payments.

Recommendation

Nabors (NBR) represents a high-upside play for investors who believe the international drilling cycle has years of growth left. The recent debt reduction has removed the "bankruptcy risk" that once shadowed the stock, making it a compelling candidate for a recovery-to-growth portfolio.

Precision Drilling (NYSE: PDS)

Precision Drilling (NYSE: PDS) is Canada’s largest drilling contractor and a major player in the U.S. land market. Similar to Nabors, Precision has undergone a massive digital transformation, branding its fleet as "Super Series" rigs—high-performance machines equipped with the Alpha™ automation platform.

Business Model and Revenue Streams 📦

Precision Drilling operates a high-utilization business model focused on "high-spec" land rigs that cater to the most complex drilling environments in North America and the Middle East. Its revenue is generated through two primary segments:

• Contract Drilling Services: This is the core revenue driver, encompassing land drilling, directional drilling, and rig manufacturing. Precision specializes in "Super Triple" and "Super Single" rigs that are designed for fast moves and long-reach horizontal drilling. Revenue is primarily based on dayrates.
• Completion and Production Services: This segment provides "capex-light" services, including well servicing (workover rigs), oilfield equipment rentals, and camp/catering services. This provides a diversified income stream that often remains active even when new drilling slows down.

Macroeconomic Sensitivity

As a North American-centric operator, Precision is heavily influenced by U.S. and Canadian energy policies. In 2025 and heading into 2026, the company has benefited from a more favorable regulatory environment in the U.S. ("Drill, Baby, Drill" policy shifts), which has offset some of the volatility in natural gas prices. Furthermore, its heavy exposure to the Canadian market makes it a primary beneficiary of new pipeline capacity (like the Trans Mountain expansion), which has improved local pricing and boosted customer demand for drilling.

Recent Performance and Corporate Developments 📈

Precision entered 2026 on a wave of strategic momentum, following a year of aggressive debt reduction and technological adoption.

Q3 2025 Financial Highlights: 💰

• Revenue: Reported at $462 million, a seasonal recovery of 13.7% over the previous quarter.
• Operational Margins: Maintained strong daily margins of approximately $13,000 per day in Canada and $8,700 per day in the U.S., proving that its premium rig fleet can command high prices even in a fluctuating market.
• Net Debt Reduction: As of late 2025, Precision met its goal of reducing debt by over $100 million for the year. Since 2022, they have slashed total debt by roughly $535 million.

Strategic Initiatives and Mergers: 🤝

There were no major mega-mergers in late 2025; however, Precision has focused on "tuck-in" acquisitions, such as the purchase of High Arctic Energy Services’ well servicing business. This move consolidated their lead in the Canadian service market.

Additionally, a major leadership change occurred in late 2025: Carey Ford was appointed as the new President and CEO following the retirement of long-time leader Kevin Neveu. This transition is seen by analysts as a "steady hand" move, as Ford previously served as CFO and was the architect of the company’s debt-reduction plan.

Profitability and Fair Value 🎯

Precision’s path to sustained profitability is now tied to its "Alpha" technology suite, which is installed on over 90% of its active fleet. These digital tools allow Precision to charge premium "tech fees" on top of standard dayrates.

• Valuation: PDS currently trades at a forward P/E ratio of approximately 10.4x. For a company expected to grow earnings by over 30% in 2026, many analysts view this as an "oversold" valuation.
• Fair Value: Using a 5-year Discounted Cash Flow (DCF) model, some institutional analysts have placed a fair value on the stock at roughly $114 per share, representing a significant upside from current trading levels near $72–$74. The company’s focus on diverting 35%–45% of free cash flow toward share buybacks is expected to further support the stock price.

Analyst Estimates and Ratings 📊

• Consensus Rating: Precision Drilling currently holds a "Strong Buy" consensus. Out of the 12 analysts covering the stock, the vast majority have assigned a "Buy" or "Outperform" rating in the last 30 days.
• Price Targets: * Average Target: $99.00
  • High Target: $117.00
  • Low Target: $81.00
• Recent Upgrades: Firms like Raymond James and RBC Capital recently boosted their price targets to $117 and $133 (CAD), citing the company’s improved credit profile and an S&P Global rating upgrade to 'BB-'.

Investor-Focused Takeaway: Is PDS Right for Your Portfolio?

Precision Drilling offers a high-leverage way to play the North American energy recovery. Unlike smaller contractors, Precision has the scale and the technology to remain the "first-call" choice for major oil and gas producers.

What to Watch in the Near Term: 📈

1. Winter Drilling Season: Keep a close eye on the Q1 2026 rig utilization in Canada; the "winter peak" is traditionally the most profitable period for PDS.
2. Share Buybacks: With debt targets met, look for the company to potentially increase its share repurchase program, which would boost Earnings Per Share (EPS).
3. Natural Gas Rebound: PDS has significant exposure to gas-weighted basins like the Haynesville and Marcellus; any sustained rise in gas prices will disproportionately benefit their U.S. rig count.

Recommendation

Precision Drilling (PDS) is a top-tier pick for 2026. With a "cleansed" balance sheet, a new CEO focused on shareholder returns, and a dominant position in the expanding Canadian energy sector, the stock is well-positioned for a breakout toward its $100+ price targets.

Final Take: The Tech Muscle and Automation Intelligence Powering Energy

The global energy resurgence isn’t just about drilling holes—it’s about execution at scale. And that requires two things: high-performance hardware that can survive the world's toughest environments and automation software that turns raw data into drilling efficiency.

That’s where Nabors Industries (NBR) and Precision Drilling (PDS) stand apart.

🌍 Nabors Industries (NBR) — The Global High-Tech Powerhouse

• ✔ Massive international footprint with a dominant joint venture in Saudi Arabia.
• ✔ Aggressive debt reduction (down $600M+) providing a cleaner path to profitability.
• ✔ Integrated tech suite (NDS) that delivers higher margins than traditional rig leasing.
• ➤ Best for: Investors looking for a high-leverage, de-risked play on the multi-year international drilling cycle and energy transition tech.

🍁 Precision Drilling (PDS) — The King of North American Efficiency

• ✔ Dominant market share in Canada, perfectly positioned for new pipeline capacity.
• ✔ Alpha™ automation platform installed on nearly 100% of the active fleet.
• ✔ Aggressive shareholder returns via buybacks and a "Strong Buy" analyst consensus.
• ➤ Best for: Investors seeking exposure to North American energy security with a focus on free cash flow and technological superiority.

Investor Insight

🧩 Want global scale and a massive balance sheet turnaround? → NBR

⚙️ Want North American dominance and high-margin automation? → PDS

Bottom Line:

Modern energy doesn’t scale on old methods—it scales on automation intelligence and high-spec infrastructure.

Nabors owns the global reach and the technology to power it, while Precision Drilling dominates the North American landscape with unmatched digital efficiency. As global energy demand continues to outpace supply, NBR and PDS aren’t just drilling contractors—they are the foundational infrastructure for the next decade of energy.

​
Happy Trading
​— Team Premium Stock Alerts