CALGARY, ALBERTA — (Marketwire) — 02/14/13 — (Canadian Dollars Except as Indicated)
This news release contains “forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release.
The Board of Directors of Precision Drilling Corporation (TSX: PD) (NYSE: PDS) (“Precision” or the “Corporation”) has declared a first quarter dividend on its common shares of $0.05 per common share, payable on March 15, 2013, to shareholders of record on February 28, 2013. For Canadian income tax purposes, all dividends paid by Precision on its common shares are designated as “eligible dividends”, unless otherwise indicated by Precision.
Precision reported a net loss of $116 million or $0.42 per diluted share for the three months ended December 31, 2012 compared to net earnings of $28 million for the fourth quarter of 2011. In the quarter Precision recognized an after tax asset decommissioning charge and goodwill impairment charge that combined reduced net earnings by $179 million and net earnings per diluted share by $0.63 compared to the prior year when an after tax asset decommissioning charge was recognized that reduced net earnings by $76 million and net earnings per diluted share by $0.26.
Revenue for the fourth quarter of 2012 was $534 million and earnings before income taxes, finance charges, foreign exchange, impairment of goodwill, loss on asset decommissioning and depreciation and amortization (“Adjusted EBITDA”) totaled $177 million compared to $587 million and $230 million, respectively, during the comparable period in 2011. The decrease in revenue and Adjusted EBITDA was primarily the result of lower activity levels across most business lines over the prior year period and higher operating costs partially offset by increases in pricing. Activity for Precision in the fourth quarter of 2012, as measured by drilling rig utilization days, decreased 23% in Canada and 19% in the United States compared to 2011.
Fourth quarter 2012 revenue and Adjusted EBITDA were higher than the third quarter 2012 revenue and Adjusted EBITDA of $485 million and $151 million, respectively, primarily as a result of higher dayrates and margins in the United States and Canada coupled with increased activity levels in Canada.
For the year ended December 31, 2012, Precision reported net earnings of $52 million or $0.18 per diluted share compared to net earnings of $193 million or $0.67 per diluted share for 2011. Excluding the impact of the asset decommissioning and goodwill impairment, net earnings per diluted share would have been $0.81 in 2012 compared to $0.93 in 2011. Revenue for the year was $2,041 million compared to $1,951 million in 2011. Adjusted EBITDA totaled $671 million for 2012 compared to $695 million in 2011, a decrease of 3%. Improved pricing was offset by lower activity levels in both operating segments. Activity for Precision in 2012, as measured by drilling rig utilization days, decreased 15% in Canada and 9% in the United States compared to 2011.
Precision–s wholly-owned international subsidiary, Grey Wolf Drilling International Ltd., recently contracted two rigs with a customer for deep drilling operations in Kurdistan. The two 2000 HP rigs are existing Precision rigs that will be upgraded for desert operations. These rigs are expected to be deployed mid 2013 under a long-term contract. Additionally, Precision has signed a contract for operations in Mexico that will add one additional rig to its Mexican fleet during the second quarter of 2013.
During the fourth quarter of 2012 Precision provided an update on its 2012 and 2013 capital expenditure programs. Precision concluded 2012 with $868 million in capital expenditures, approximately $52 million lower than planned. Of the $52 million in underspent capital from 2012, $41 million is targeted for specific projects and will be carried forward and spent in early 2013. Planned capital expenditures for 2013 are now $526 million and include capital expenditures from new build announcements in 2012 that will be completed in 2013 and approximately 50% of the costs associated with the two rig contract in Kuwait. A substantial portion of the 2013 capital plan is utilization and demand based and if activity levels increase or decline, Precision has the ability to adjust the plan accordingly.
Kevin Neveu, Precision–s President and Chief Executive Officer, stated: “While 2012 finished with softening demand for our services in our Canadian and U.S. markets I am pleased that we continue to see excellent opportunities to deploy our High Performance, High Value rigs internationally, expanding our breadth in the Arabian Gulf and with integrated service providers in Mexico. Like most, we remain cautious on our outlook for near term energy services growth in North America, but remain firm believers in the long term opportunities for drilling and development of unconventional hydrocarbon resources.”
“Precision–s contract for two rigs for deployment to Northern Iraq in the Kurdistan Region is the most recent step in our international expansion. These rigs will be mobilized from our U.S. fleet and will operate for an international oil company on long-term contracts. Including the two new builds announced in December for Kuwait, by mid-2014 we expect to have seven rigs operating in the Arabian Gulf region and believe additional opportunities for Precision–s High Performance, High Value services will emerge. The additions to our Mexican fleet include one rig to be deployed late in the first quarter and a second rig in the second quarter moving our Mexican fleet to seven rigs, with six currently contracted to drill deep, high pressure oil wells for international integrated project service providers.”
“While overall North American opportunities ebbed during 2012, due primarily to capital budget restraint by our customers, demand for our Tier 1 assets remained firm and Precision–s fleet transformation continued throughout the year. The Corporation deployed 36 new build Super Series drilling rigs, almost twice as many as any previous year in the Corporation–s history, and all delivered to long-term customer contracts. In addition, during 2012 we upgraded 11 drilling rigs under long-term customer contracts.”
“Precision now has 188 Tier 1 rigs, compared to 109 just three years ago. Adding our 107 Tier 2 rigs, Precision has 295 High Performance rigs ideally suited to drill effective, predictable and repeatable horizontal wells. Precision–s decision to accelerate our exit of the Tier 3 business at the end of 2012 reflects our capability to respond changing customer dynamics and the long-term value customers see in high performance services.”
“In late 2011, Precision opened its Houston Technology Center which includes a permanent state of the art, fully functional Super Series training drilling rig. During 2012, Precision trained nearly 1,500 employees at this facility. In mid-2012 at our Red Deer Well Service Technology Center we constructed a similar fully functional well service rig to support the ongoing training and development of our well service field personnel. Combined training activities in Canada, the U.S. and our International operations touched most of our employees, including the 3,000 new employees added to Precision during 2012. The result of this strategic investment in our people is a high performance, highly trained field work force that delivered Precision the best safety performance in our history with 269 drilling rigs and 187 well service rigs without a single recordable safety incident in 2012. While customers view safety as a key differentiator, we consider as our foundation the safety of our people and believe our safety performance is one of our most important competitive advantages.”
“During 2013 we plan to expand our Nisku, Alberta Operations and Technology Center and initiate the construction of a second state of the art drilling rig training facility employing modern drilling technology to continue the ongoing training and development of our field work force.”
“In our Completion and Production Services segment, Precision continues to expand both its service lines and geographic presence to meet our customer needs. We have made investments in people and equipment to align ourselves with the demands of unconventional field development. Additionally, we continue to grow our integrated directional drilling service and see interest from our customers for an integrated model that results in cost savings and reliability for our customers.”
“Precision continued to exercise capital discipline by reducing its capital expenditure plan several times throughout 2012 in response to softening industry conditions and by maintaining rigid return hurdles for evaluating investment opportunities. Also, as our free cash flow outlook improved, we were pleased to be able to institute a quarterly dividend. Finally, we continued to maintain financial flexibility, at year-end 2012 Precision had $153 million of cash on hand and US$823 million undrawn availability in our revolving credit facility.”
“Customer demand for Precision–s services is reflected in the solid dayrates generated by our drilling rigs in Canada and the U.S., despite reduced industry rig counts. Canadian drilling dayrates increased by $2,026 over the previous year comparable quarter while U.S. drilling dayrates increased by $2,270. The operating results in both Canada and the U.S. point to the strength of the Tier 1 market in Canada and the U.S. as well as Precision–s ability to deploy new build and upgraded drilling rigs to its active fleet at higher dayrates in 2012. In the U.S., turnkey activity in the quarter accounted for the majority of the dayrate and operating cost increases from the prior year.”
“Canadian oil directed drilling activity has been strong in the first quarter of 2013. Precision–s current active rig count in Canada is 152 and its average rig count of 90 during the fourth quarter of 2012 was 23% lower than the average rig count of 117 during the comparable quarter of 2011. Dayrate increases realized throughout 2012 reflect continued demand for high performance assets in the Canadian marketplace, Precision–s improved rig mix with the addition of new build and upgraded rigs, and pass through of wage increases.”
“U.S. drilling activity decreased in 2012 as overall industry activity declined. Precision–s current active U.S. rig count is 83 and its average rig count of 87 during the fourth quarter of 2012 was 19% lower than the average rig count during the comparable quarter in 2011. Despite the active rig count decline, Precision realized dayrate increases year over year.”
“Precision–s High Performance, High Value reputation with customers, multiple growth avenues in North American and international markets and our focus on unconventional and technically challenging applications provide the foundation for future revenue and earnings growth. I believe we have positioned Precision for market success today and into the future,” concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING INFORMATION
Revenue in the fourth quarter of 2012 was $53 million lower than the prior year period. The decrease was mainly due to lower equipment utilization in both Canada and the United States partially offset by a period-over-period increase in dayrates. Compared to the prior year, revenue in Precision–s Contract Drilling Services segment decreased by 9% in the fourth quarter while in the Completion and Production Services revenue decreased 11%.
Adjusted EBITDA margin (Adjusted EBITDA as a percentage of revenue) was 33% for the fourth quarter of 2012 compared to 39% for the same period in 2011. The decrease in EBITDA margin was primarily attributable to higher average costs and lower utilization in both Canada and the United States in the fourth quarter of 2012 versus the prior year period. Higher operating costs in the quarter were the result of labour related costs and higher costs internationally. Precision–s term contract position with customers, a highly variable operating cost structure and economies achieved through vertical integration continue to support EBITDA margins.
Precision–s 2013 priorities are threefold:
After the decommissioning of the previously announced 52 drilling rigs (30 in the United States and 22 in Canada), Precision–s current fleet consists of 321 contract drilling rigs, including 186 in Canada, 127 in the United States and eight rigs in international locations. Consistent with Precision–s High Performance, High Value strategy, the Corporation performed a thorough review of its rig fleet in 2012, resulting in a fourth quarter decommissioning of 52 legacy drilling rigs. This decommissioning marked Precision–s exit of the Tier 3 contract drilling business and the Corporation–s continued focus on the high performance segment of the market. Precision will retain 26 legacy drilling rigs for seasonal, stratification and turnkey drilling work (“PSST rigs”). Precision currently maintains directional drilling equipment and personnel capacity to run 91 jobs. Precision–s Completion and Production Services segment includes 214 service rigs (which include service rigs, snubbing units and coil tubing units), 57 drilling and base camps and a broad mix of rental equipment.
For the fourth quarter of 2012, West Texas Intermediate crude oil averaged US$88.10 per barrel, 6% lower when compared to US$93.88 per barrel in the same period in 2011. Brent crude prices averaged US$108.15 per barrel during the fourth quarter of 2012, 5% higher when compared to US$102.75 per barrel for the same period in 2011. AECO natural gas spot prices averaged $3.20 per MMBtu, 1% higher than the fourth quarter 2011 average of $3.18 per MMBtu. In the United States, Henry Hub natural gas spot prices averaged US$3.40 per MMBtu in the fourth quarter of 2012, an increase of 3% over the fourth quarter 2011 average of US$3.31 per MMBtu.
Summary for the three months ended December 31, 2012:
Summary for the year ended December 31, 2012:
OUTLOOK
Precision–s average active rig count of 87 rigs in the United States for the fourth quarter of 2012 was down 20 rigs over the same period of 2011 and three rigs over the third quarter of 2012. Precision is currently running 83 rigs in the United States and expects its active rig count in the United States to remain flat over the coming months. Internationally in 2013, Precision–s rig count is expected to grow from eight rigs to 11 rigs as the two recently contracted rigs begin drilling in Kurdistan and the Mexican rig count is expected to increase from five rigs drilling to six.
In Canada, Precision averaged 90 rigs operating during the fourth quarter of 2012, down 27 rigs over the same period in 2011 and up six rigs over the third quarter of 2012. Precision expects strong levels of market activity to continue during the first quarter of 2013 until spring break-up and expects to benefit from the fleet enhancements made throughout 2012.
Precision has a strong portfolio of term contracts that provide a base level of activity and cash flow. Precision currently has 109 rigs committed under term contracts for the first quarter of 2013 and 104 rigs contracted for the second quarter of 2013. In Canada, term contracted rigs normally generate 250 utilization days per rig year due to the seasonal nature of Canadian activity, whereas in the United States they normally generate 365 utilization days per rig year in most regions.
For 2013, based on current drilling rig contracts, Precision has term contracts for 52 rigs in Canada, 36 rigs in the United States and eight internationally. Since the third quarter of 2012 earnings release, Precision has added term contracts that increased the contracted rig average for 2013 from 86 rigs to 96 rigs.
Capital expenditures are expected to be approximately $526 million for 2013 and include:
Precision expects that the $526 million will be split $434 million for the Contract Drilling segment and $92 million for the Completion and Production Services segment.
To date in 2013, there has been lower drilling activity in Canada and the United States than in the prior year. According to industry sources, as at February 8, 2013, the U.S. active land drilling rig count was down about 13% from the same point in the prior year and the Canadian drilling rig count had decreased by about 11%. Although the industry and Precision have experienced year-over-year declines in rig utilization, continued demand for Tier 1 assets has supported dayrates charged to customers in both Canada and the United States.
Natural gas production in the United States has remained strong despite reduced natural gas drilling activity. The United States natural gas storage levels as at February 1, 2013 were 15% above the five-year average and 8% below storage levels of a year ago. The increase in oil and liquids-rich drilling in areas like West Texas, the Bakken and the Eagle Ford has resulted in the United States oil rig count as at February 8, 2013 to be 6% higher than it was a year ago. To date, customer changes in natural gas drilling plans are reflected in a decline in the rig count targeting dry gas plays. If low natural gas prices continue, Precision and the North American drilling industry could see a further reduction in demand for natural gas drilling.
Precision, along with the land drilling industry, is in the process of upgrading the fleet of drilling rigs through newly built rigs and upgraded existing rigs. Precision believes that this “retooling” of the industry wide fleet will result in the virtual obsolescence of Tier 3 rigs in North America over the next few years. In the fourth quarter of 2012 Precision decommissioned 42 Tier 3 drilling rigs and 10 Tier 2 rigs from its fleet. Precision is exiting the Tier 3 contract drilling business but will retain 26 drilling rigs for seasonal, stratification and turnkey drilling work, these rigs will be categorized as “PSST” rigs. Precision–s focus on the Tier 1 and Tier 2 market is aligned with the Corporation–s strategy, customer relationships and competitive position.
SEGMENTED FINANCIAL RESULTS
Precision–s operations are reported in two segments: the Contract Drilling Services segment which includes the drilling rig, directional drilling, oilfield supply and manufacturing divisions; and the Completion and Production Services segment which includes the service rig, snubbing, coil tubing, rental, camp and catering and wastewater treatment divisions.
Contract Drilling Services segment revenue for the fourth quarter of 2012 decreased by 9% to $452 million and Adjusted EBITDA decreased by 21% to $172 million compared to the same period in 2011. The decrease in revenue and Adjusted EBITDA was due to the lower drilling rig activity partially offset by higher average rates per day for both Canada and the United States and increased revenue in international contract drilling operations.
Activity in North America was impacted by decreased customer demand for oil and liquids-rich natural gas related drilling activity as a result of lower global oil prices. In the fourth quarter, drilling rig revenue per utilization day in both Canada and the United States was up 10% over the prior year. The increase in average dayrates for Canada was the result of improved rig mix and solid demand for Tier 1 assets. In the United States the majority of the increase was driven by higher turnkey activity. During the quarter, 41% of Precision–s utilization days in Canada were generated from rigs under term contract compared with 38% in 2011 while in the United States 68% of utilization days were generated from rigs under term contract as compared to 79% in the prior year period. At the end of the quarter, Precision had 54 drilling rigs working under term contracts in the United States and 55 in Canada.
Drilling rig utilization days in Canada (drilling days plus move days) during the fourth quarter of 2012 were 8,242, a decrease of 23% compared to 2011. Drilling rig utilization days for Precision in the United States were 8,014 or 19% lower than the same quarter of 2011 due to decreased demand as customer–s conserved cash and deferred drilling programs into 2013. The majority of activity came from oil and liquids-rich natural gas related plays. On average, Precision had eight rigs working internationally during the fourth quarter of 2012 compared with two in the corresponding quarter of 2011.
Contract Drilling Services segment operating costs were 60% of revenue for the quarter, which is 6 percentage points higher than the prior year period. Higher operating costs in the quarter were the result of higher relative costs internationally, increased labour costs and the decrease in activity as fixed costs were spread over a lower revenue base. On a per day basis, operating costs for the drilling rig division in Canada were above the prior year primarily because of an increase in crew wage expense. Operating costs for the quarter in the United States on a per day basis were up from the comparable period in 2011 primarily due to higher proportionate turnkey activity as well as higher labour and overall operating costs. Typically, labour rate increases are recovered in dayrate increases.
During the fourth quarter the Contract Drilling Services segment recognized a loss of $192 million related to the decommissioning of 52 drilling rigs, 22 in Canada and 30 in the United States. Quarterly depreciation in the Contract Drilling Services segment increased 25% from the prior year. As discussed in Management–s Discussion and Analysis for the year ended December 31, 2011, Precision changed its depreciation policy on certain Tier 3 rigs from the unit of production method to straight-line over four years resulting in approximately $5 million in additional depreciation in the quarter. Additional increases in depreciation are the result of a greater proportion of operating days from our Tier 1 drilling rigs in 2012 relative to 2011, losses on asset disposals in the current quarter and depreciation from the growth in directional drilling and international contract drilling. With the exception of certain PSST equipment and directional drilling equipment, contract drilling operations use the unit of production method of calculating depreciation.
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES
Completion and Production Services segment revenue for the fourth quarter decreased by 11% from the fourth quarter of 2011 to $85 million and Adjusted EBITDA decreased by 34% to $22 million. The decrease in revenue and Adjusted EBITDA is attributable to decreased activity in all service lines as customers decreased spending in response to general economic uncertainty.
Well servicing activity decreased 12% from the prior year quarter, with the fleet generating 77,234 operating hours in the fourth quarter of 2012 compared with 88,131 hours in the prior year quarter for utilization of 39% and 43%, respectively. The decrease was a result of decreased service rig activity due to reduced completion and production work on oil wells. Approximately 95% of the fourth quarter service rig activity was oil related. Precision–s rental division activity was 38% lower than the prior year comparative period primarily due to lower completion and frac related activity in the industry offset by new equipment added to the fleet.
Average service rig revenue increased $9 per operating hour from the prior year period to $740 primarily due to the start-up of coil tubing activity in 2012 which operates at higher rates.
Operating costs as a percentage of revenue increased to 70% in the fourth quarter of 2012 from 61% in the same period of 2011. Operating costs per service rig operating hour increased over the comparable period in 2011 due primarily to higher fuel costs and coil tubing operations.
Depreciation in the Completion and Production Services segment in the fourth quarter of 2012 was 33% higher than the prior year due to higher per unit depreciation expense associated with new equipment and losses on asset disposals in the current quarter. The well servicing division uses the unit of production method of calculating depreciation while the other product lines within the Completion and Production Services segment use the straight-line method.
SEGMENT REVIEW OF CORPORATE AND OTHER
Precision views its corporate segment as support functions that provide assistance to more than one segment. The Corporate and other segment had an Adjusted EBITDA loss of $17 million for the fourth quarter of 2012, $3 million lower than the prior year comparative period due to lower share based performance incentive costs and lower costs as a result of the decrease in activity.
OTHER ITEMS
Net financial charges for the quarter were $22 million an increase of $3 million from the fourth quarter of 2011 primarily due to a one-time gain in 2011.
The Corporation had a foreign exchange gain of $2 million during the fourth quarter of 2012 due to the weakening of the Canadian dollar versus the U.S. dollar and the impact thereof on the net U.S. dollar denominated monetary position in the Canadian dollar-based companies.
Income taxes for the quarter were $51 million lower than the prior year primarily as a result of reduced operating results and income taxed at lower rates.
LIQUIDITY AND CAPITAL RESOURCES
The oilfield services business is inherently cyclical in nature. Precision employs a disciplined approach to minimize costs through operational management practices and a variable cost structure, and to maximize revenues through term contract positions with a focus on maintaining a strong balance sheet. This operational discipline provides Precision with the financial flexibility to capitalize on strategic acquisitions and internal growth opportunities at all points in the business cycle.
Operating within a highly variable cost structure, Precision–s maintenance capital expenditures are tightly governed by and highly responsive to activity levels with additional cost savings leverage provided through Precision–s internal manufacturing and supply divisions. Expansion capital for new build rig programs require two to five year term contracts in order to mitigate capital recovery risk.
Liquidity remains sufficient as Precision had a cash balance of $153 million and the US$850 million senior secured revolving credit facility (“Secured Facility”) remains undrawn except for US$27 million in outstanding letters of credit as at December 31, 2012. In addition to the Secured Facility, Precision has available $55 million in secured operating facilities, excluding letters of credit of $19 million, which are used for working capital management and a $25 million secured letter of credit facility.
As at December 31, 2012 and 2011 Precision had the following long-term debt balances:
As at December 31, 2012, the Corporation was in compliance with the covenants under the Secured Facility. Precision expects to remain in compliance with financial covenants under its Secured Facility and have full access to credit lines during 2013.
The current blended cash interest cost of Precision–s debt is approximately 6.6%.
Precision has designated its U.S. dollar denominated long-term debt as a hedge of its investment in its United States operations. To be accounted for as a hedge, the foreign currency denominated long-term debt must be designated and documented as such and must be effective at inception and on an ongoing basis.
The following tables reconcile the weighted average shares outstanding used in computing basic and diluted earnings (loss) per share:
ADDITIONAL GAAP MEASURES
Precision uses certain additional GAAP measures that are not defined terms under IFRS to assess performance and believes these measures provide useful supplemental information to investors. The following are the measures Precision uses in assessing performance.
Adjusted EBITDA
Management believes that in addition to net earnings (loss), earnings before income taxes, financing charges, foreign exchange, impairment of goodwill, loss on asset decommissioning and depreciation and amortization (“Adjusted EBITDA”), as derived from information reported in the Consolidated Statements of Earnings (Loss), is a useful supplemental measure as it provides an indication of the results generated by Precision–s principal business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed or how depreciation and amortization and asset impairment charges affect results.
Operating Earnings (Loss)
Management believes that in addition to net earnings (loss), operating earnings (loss) as reported in the Consolidated Statements of Earnings (Loss) is a useful supplemental measure as it provides an indication of the results generated by Precision–s principal business activities prior to consideration of how those activities are financed, the impact of foreign exchange or how the results are taxed.
Funds Provided by Operations
Management believes that in addition to cash provided by operations, funds provided by operations, as reported in the Consolidated Statements of Cash Flow is a useful supplemental measure as it provides an indication of the funds generated by Precision–s principal business activities prior to consideration of working capital, which is primarily made up of highly liquid balances.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements contained in this report, including statements that contain words such as “could”, “should”, “can”, “anticipate”, “estimate”, “intend”, “plan”, “expect”, “believe”, “will”, “may”, “continue”, “project”, “potential” and similar expressions and statements relating to matters that are not historical facts constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking information and statements”).
In particular, forward-looking information and statements include, but are not limited to, the following: the two 2000 HP rigs contracted for deep drilling operations in Kurdistan are expected to be deployed mid 2013 under a long-term contract; Precision signed a customer contract for operations in Mexico that will add one additional rig to its Mexican fleet during the second quarter of 2013; by mid-2014, we expect to have seven rigs operating in the Arabian Gulf region and believe additional opportunities will emerge; amount and use of planned capital expenditures; if activity levels increase or decline, Precision can adjust the capital plan; Precision expects to have six rigs running in Mexico and five rigs running in the Middle East by the end of the second quarter of 2013 with two Kuwait rigs to be added to the fleet in early 2014; Precision believes its customers– long-term focus and the growing number of unconventional and technically challenging oil drilling opportunities provide the foundation to grow its active rig count; Precision believes that throughout 2013, it will effectively utilize its people, sizeable equipment base and proven systems to reduce operating costs and expand operating margins; Precision expects its active rig count in the United States to remain flat over the coming months and it expects to grow from eight rigs to 11 rigs internationally; Precision expects strong levels of market activity to continue during the first quarter until spring break-up and expects to benefit from the fleet enhancements made throughout 2012 in the form of higher activity levels; Precision will retain 26 legacy drilling rigs for seasonal, stratification and turnkey drilling work; Precision–s expected capital expenditures for 2013; Precision expects that the $526 million will be split $434 million for the Contract Drilling segment and $92 million for the Completion and Production Services segment; if low natural gas prices continue, Precision and the North American drilling industry could see further reduction in demand for natural gas drilling; Precision believes that the “retooling” of the industry wide fleet will result in the virtual obsolescence of Tier 3 rigs in North American markets over the next few years; and the payment of dividends pursuant to Precision–s dividend plan.
These forward-looking information and statements are based on certain assumptions and analysis made by the Corporation in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Corporation–s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Corporation–s expectations. Such risks and uncertainties include, but are not limited to: fluctuations in the price and demand for oil and natural gas; fluctuations in the level of oil and natural gas exploration and development activities; fluctuations in the demand for contract drilling, well servicing and ancillary oilfield services; capital market liquidity available to fund customer drilling programs; availability of cash flow, debt and/or equity sources to fund the Corporation–s capital and operating requirements, as needed; sustainability of our dividend; the effects of seasonal and weather conditions on operations and facilities; the existence of competitive operating risks inherent in its businesses; general economic, market or business conditions; changes in laws or regulations; the availability of qualified personnel, management or other key inputs; currency exchange fluctuations; and other unforeseen conditions which could impact the use of services supplied by Precision and Precision–s ability to respond to such conditions.
Consequently, all of the forward-looking information and statements made in this report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Corporation will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Corporation or its business or operations. Readers are therefore cautioned not to place undue reliance on such forward-looking information and statements. Except as may be required by law, the Corporation assumes no obligation to update publicly any such forward-looking information and statements, whether as a result of new information, future events or otherwise.
FOURTH QUARTER AND YEAR END 2012 EARNINGS CONFERENCE CALL AND WEBCAST
Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on Thursday, February 14, 2013.
The conference call dial in numbers are 1-877-240-9772 or 416-340-8530
A live webcast of the conference call will be accessible on Precision–s website at by selecting “Investor Centre”, then “Webcasts”. Shortly after the live webcast, an archived version will be available for approximately 30 days.
An archived recording of the conference call will be available approximately one hour after the completion of the call until February 21, 2013 by dialing 1-800-408-3053 or 905-694-9451, pass code 2351454.
About Precision
Precision is a leading provider of safe and High Performance, High Value services to the oil and gas industry. Precision provides customers with access to an extensive fleet of contract drilling rigs, directional drilling services, well service & snubbing rigs, coil tubing services, camps, rental equipment, and wastewater treatment units backed by a comprehensive mix of technical support services and skilled, experienced personnel.
Precision is headquartered in Calgary, Alberta, Canada. Precision is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.
Contacts:
Precision Drilling Corporation
Carey Ford
Vice President, Finance and Investor Relations
403.716.4575
403.716.4755 (FAX)
Suite 800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1