Zacks Industry Outlook Highlights Transocean, Helmerich & Payne and Precision Drilling

Chicago, IL - September 11, 2025 - Today, Zacks Equity Research discusses Transocean Ltd. RIG, Helmerich & Payne HP and Precision Drilling Corp. PDS. Industry: Oil & Gas Drilling Link: https://www.zacks.com/commentary/2749573/what-makes-these-3-oil-gas-drilling-stocks-worth-watching The Zacks Oil and Gas - Drilling industry is weighed down by uncertainty and volatility. Customers are pulling back on spending as shifting oil prices, geopolitical risks and trade tensions cloud visibility. Contracting activity has slowed, and while projects are still in play, many operators are deferring work to protect balance sheets. At the same time, oversupply risk persists, with idle rigs and softer day rates threatening margins if activity fails to pick up. Yet, the longer-term story isn't all bleak. The structural rise in LNG demand is expected to draw fresh drilling activity, particularly from 2026 onward, offering drillers a more stable outlook. Global gas expansion should sustain rig utilization and anchor long-cycle contracts tied to offshore basins. Against this backdrop, select names like Transocean Ltd., Helmerich & Payne and Precision Drilling Corp. stand out as better-positioned players for investors eyeing future resilience. Industry Overview The Zacks Oil and Gas - Drilling industry consists of companies that provide rigs (or specialized vehicles) on a contractual basis to explore and develop oil and gas. These operators offer drilling rigs (both land-based/onshore and offshore), equipment, services and manpower to exploration and production companies worldwide. Drilling for hydrocarbons is costly and technically difficult, and its future primarily depends on contracting activity and the total number of available rigs at a given time rather than the price of oil or gas. Within the industry, it's interesting to note that the volatility associated with offshore drilling companies is much higher than that of their onshore counterparts, and their share prices are more correlated to the price of oil. Overall, drilling stocks are among the most volatile in the entire equity market. 3 Trends Defining the Oil and Gas - Drilling Industry's Future Near-Term Outlook Hit by Rising Uncertainty: Macroeconomic headwinds are making customers more cautious in their spending plans. Heightened geopolitical risks, uneven oil prices, and ongoing trade disputes are adding volatility to an already delicate market backdrop. Although large projects have not been canceled, the flow of tenders and contract awards has clearly slowed. Many operators are prioritizing capital discipline, opting to defer work where possible. This cautious approach reduces near-term earnings visibility for drillers and could pressure fleet utilization if these conditions linger. Structural LNG and Gas-Driven Demand: On the positive side, global LNG expansion is set to create a powerful demand pull for U.S. natural gas and offshore drilling. As new liquefaction facilities ramp up from 2026 onward, producers will need to secure higher volumes, spurring drilling and completions activity. This structural demand growth is less dependent on short-term oil price fluctuations and supports a steady call on rigs and equipment. Over the next two to three years, the industry should benefit from stronger utilization and better visibility into long-cycle contracts tied to LNG and gas-focused developments. Oversupply Risk and Slower Contracting: Although long-term demand for deepwater and LNG-linked projects is positive, the near-term market has softened. Day rates have slipped from prior highs, and utilization is expected to bottom in the mid-80% range before recovering. Meanwhile, cold-stacked rigs and underutilized equipment still hang over the market. If reactivations accelerate or new supply enters too quickly, the delicate balance between supply and demand could erode pricing power. This risk is particularly acute during slower contracting cycles when operators are unwilling to lock into long-term commitments. Zacks Industry Rank Indicates Bearish Outlook The Zacks Oil and Gas - Drilling industry is a nine-stock group within the broader Zacks Oil - Energy sector. It currently carries a Zacks Industry Rank #210, which places it in the bottom 14% of 244 Zacks industries. The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates challenging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1. The industry's position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are becoming pessimistic about this group's earnings growth potential. While the industry's earnings estimates for 2025 have gone down 94.6% in the past year, the same for 2026 have fallen 66% over the same timeframe. Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it's worth taking a look at the industry's shareholder returns and current valuation first. Industry Underperforms Sector & S&P 500 The Zacks Oil and Gas - Drilling industry has fared worse than the broader Zacks Oil - Energy sector as well as the Zacks S&P 500 composite over the past year. The industry has gone down 20% over this period compared with the broader sector's increase of 5.7%. Meanwhile, the S&P 500 has gained 20.2%. Industry's Current Valuation Since oil and gas drilling companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. This is because the valuation metric takes into account not just equity but also the level of debt. For capital-intensive companies, EV/EBITDA is a better valuation metric because it is not influenced by changing capital structures and ignores the effect of non-cash expenses. On the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), the industry is currently trading at 5.50X, significantly lower than the S&P 500's 17.94X. It is, however, above the sector's trailing 12-month EV/EBITDA of 5X. Over the past five years, the industry has traded as high as 24.81X, as low as 4.97X, with a median of 14.54X. 3 Oil and Gas - Drilling Stocks to Watch Transocean: This Zacks Rank #3 (Hold) company provides rigs on a contractual basis to explore and develop oil and gas. Transocean offers offshore drilling rigs, equipment, services and manpower, with particular emphasis on ultra-deepwater and harsh environment drilling services, to exploration and production companies worldwide. Transocean's fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. You can see the complete list of today's Zacks #1 Rank stocks here. During the second quarter of 2025, Transocean reported contract drilling revenues of $988 million, up nearly 15% from the prior-year figure. Notably, utilization improved from the previous quarter, while revenue efficiency remained strong. This operational reliability enhances customer confidence and supports premium day rates. The firm has a market capitalization of $3 billion. The Zacks Consensus Estimate for 2025 earnings for Transocean indicates 107.7% growth. The RIG stock has decreased 19% in a year. Helmerich & Payne: Founded in 1920 and headquartered in Tulsa, OK, Helmerich & Payne is the largest land drilling contractor in the United States. The company operates a vertically integrated model, designing, building, and modifying its proprietary FlexRig fleet while supporting operations with advanced automation, control systems, and real-time analytics. Its core strength lies in delivering efficiency, reliability, and safety across conventional and unconventional plays, making it a leader in U.S. onshore drilling solutions. Beyond its U.S. presence, Helmerich & Payne has a global footprint, with land rigs in Argentina, Colombia, Bahrain, and the United Arab Emirates, alongside a fleet of offshore platform rigs in the Gulf of Mexico. The company is also diversifying into geothermal drilling, positioning itself within the energy transition while maintaining its strong oil and gas foundation. With scale, technology, and disciplined operations, HP continues to shape modern drilling performance worldwide. The firm has a Value and Momentum score of A and B, respectively. The #3 Ranked company has a market capitalization of $2 billion. Helmerich & Payne stock has lost 33% in a year. Precision Drilling: Headquartered in Calgary, Alberta, it is one of Canada's top drilling rig contractors with operations in the United States and the Middle East, too. With over 110 rigs globally, including 68 in Canada and 39 in the United States, PDS leads in advanced drilling through its Alpha automation platform and EverGreen environmental solutions. Precision Drilling also operates well service rigs in Canada, delivering completion, workover and abandonment services. Its offerings include rental equipment, camp services and expert field support. Backed by innovation and scale, Precision Drilling continues to set high standards in safety, performance, and environmental responsibility across the energy sector. PDS beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of roughly 977.7%, on average. Additionally, the Zacks Consensus Estimate for Precision Drilling's 2025 earnings has moved up from $3.89 per share to $4.70 in the past 60 days. The company has a market capitalization of $743.3 million. PDS, carrying a Zacks Rank of 3, has lost 10% in a year. Why Haven't You Looked at Zacks' Top Stocks? Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year. Today you can access their live picks without cost or obligation. See Stocks Free >> Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/ Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates. Media Contact Zacks Investment Research 800-767-3771 ext. 9339 support@zacks.com https://www.zacks.com Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Transocean Ltd. (RIG) : Free Stock Analysis Report Helmerich & Payne, Inc. (HP) : Free Stock Analysis Report Precision Drilling Corporation (PDS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). 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Zacks Industry Outlook Highlights Transocean, Helmerich & Payne and Precision Drilling

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