US Shale Activity Inflection Underway | Upward Earnings Revisions

Research evidence excerpt

US Shale Activity Inflection Underway | Upward Earnings Revisions

sed drawworks for increased clearance under the rig floor. At the end of 2025, 52-Week High / Low US$13.08 / US$5.10

PTEN had 137 Tier-1 super-spec rigs. We now see a new tier of super-spec rigs, Shares Out (mil) 378.0

Tier-1+, emerging behind the scenes with upgrades increasing hookload capacity to Market Cap. (mil) US$4,653.2

1mm pounds from 750k to drill deeper wells and racking capacity to 35k feet from 25k to Avg Daily Vol (000) 10,071

drill longer laterals. Among the other Land Drillers, NBR has one Tier-1+ rig active, called NAV $0.00

Enterprise Value (mil) $3,819.0 the PACE-X Ultra, with two additional deployments expected later in the year. Details

Div (ann) 0.40

are more limited with HP and PDS, but each company has been making continuous Div Yield 3.25%

upgrade to its respective rig fleet. Fiscal Year End Dec

• Upgraded rigs can push dayrates towards $40k. When upgrading hookload and Price Performance - 1 Year

racking capacity, it costs $4-5mm, which is likely to push dayrates towards the mid- USD

$30k assuming a 12-month payback. Larger structural upgrades, which could range 14

$15-20mm, likely require multi-year contracts and are achieving dayrates pushing 12

$40k according to PTEN, implying 2-3 year paybacks. NBR noted its PACE-X Ultra

rig generates revenue/day well above $40k given it includes NDS content. Overall, 10

a combination of reactivation expenses and upgrade capital helps support industry 8

dayrates, implying a tighter-than-expected supply market, helping to alleviate concerns

around oversupply when looking at the 225 rig difference between now and the 6

November 2022 peak.

May-25 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26

• Continued on page 2. Source: Bloomberg