NorAm Drilling

NorAm Drilling's advantages are structural rather than commercial: a standardized fleet of eleven modernized ultra super-spec rigs with walking systems and racking capacity, a Permian-only focus, and an industry-low cost structure make its equipment hard to substitute, backed by a record of drilling some of the longest wells in the basin.

All of NorAm Drilling's equipment was under contract at a time when the basin had fewer than 10 comparable rigs available. It serves major Permian operators including ConocoPhillips, Occidental Petroleum, Permian Resources, FireBird Energy II, and Double Eagle Energy.

NorAm Drilling's 2026 growth came from higher rig utilization rather than fleet expansion, with first-quarter revenue reaching $29.4 million, up 12.3% from $26.2 million, and adjusted EBITDA advancing 40% quarter-over-quarter to $6.3 million from $4.5 million as fixed costs were spread over that utilization.

The basin offered fewer than 10 comparable rigs while every piece of NorAm Drilling's equipment was contracted. The backlog reached $30.3 million by August 25, 2026, with seven of the 11 rigs under term contracts spanning six to 12 months.

NorAm Drilling's principal risks are demand-side and contractual, as its revenue relies on Permian Basin budgets that management indicates private operators sustain above $70 WTI, pressure in the $65-70 range, and reduce below $65, while dayrates are reset at renewal in a volatile market. The firm expects dayrates to climb modestly with WTI, though recent oil price volatility has pressured contract renewal pricing.

Per-rig direct margin declined to $8,928 per day from $9,203 in Q1, while net cash flow margin fell to $5,873 from $6,591. Management intends to keep paying out excess earnings, a policy that depends on sustained positive operating cash flow.