CALGARY, Oct. 27 /PRNewswire-FirstCall/ -- Diluted earnings per
share from continuing operations were $0.02 in the third quarter of
2005 compared to $0.31 in 2004. Diluted earnings per share from
continuing operations was reduced by $0.50 in 2005 as a result of a
number of one time items the first of which is the $65.5 million
premium on repayment of the Corporation's outstanding debentures
and the second of which is the $20.3 million market value
adjustment to the shares of Weatherford International Ltd.
("Weatherford") received on the sale of the Energy Services and
International Contract Drilling divisions. Excluding one time items
related to the Corporation's recent asset disposal and
reorganization activities, diluted earnings per share from
continuing operations in the third quarter of 2005 was $0.52
compared to $0.31 in 2004. This 68% increase reflects the strong
market for oilfield services in Canada and favorable weather
conditions allowing activity levels to rise to meet demand.
Increased demand has resulted in improved pricing for all of the
Corporation's service offerings. On August 31, the Corporation
completed the sale of its Energy Services and International
Contract Drilling divisions to Weatherford for a purchase price
consisting of 26,000,000 common shares of Weatherford and
$1,130,000,000 cash consideration and recognized an associated gain
of $1.262 billion. On September 13, Precision closed the sale of
CEDA International Corporation, which carried on the Industrial
Services business, for cash proceeds of $274,000,000, recognizing a
gain of $123 million. In September, the Corporation announced its
intention to reorganize its remaining operations and holdings into
an income trust and on October 4 the associated Notice of Special
Meeting of Securityholders and Information Circular was mailed to
securityholders. The special meeting to consider the conversion is
scheduled to take place on October 31, 2005 with the actual
conversion taking place on or about November 7, 2005. Pursuant to
the reorganization, shareholders will be entitled to receive in
exchange for each common share held (i) one unit of the Trust; (ii)
their pro-rata share of the 26 million common shares of Weatherford
owned by Precision; and (iii) their pro-rata share of up to $850
million of cash. The Weatherford shares will not be subject to any
resale restrictions, however, Precision will not be able to
complete the reorganization or transfer the Weatherford shares
until a registration statement filed by Weatherford is declared
effective by the U.S. Securities and Exchange Commission. Based on
current business conditions, it is anticipated that the Board of
Trustees of the Trust will set the initial regular distributions to
the Trust's unitholders at approximately $0.24 per Trust Unit per
month with the first such payment expected to be made in the month
following the effective date of the reorganization. Also in
September, Precision provided irrevocable redemption notices for
the repayment of all of its outstanding debentures and on October
17, 2005 paid approximately $767 million to fulfill this
obligation. Results of Operations Three Months Ended September 30
2005 2004 % Change
-------------------------------------------------------------------------
Number of drilling rigs (end of period) 229 226 1.3 Drilling
operating days 12,539 9,479 32.3 Drilling revenue per operating day
16,259 15,029 8.2 Number of service rigs (end of period) 238 239 -
Service rig operating hours 122,620 112,636 8.9 Service revenue per
operating hour 551 479 15.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine Months Ended September 30 2005 2004 % Change
-------------------------------------------------------------------------
Number of drilling rigs (end of period) 229 226 1.3 Drilling
operating days 32,587 29,526 10.4 Drilling revenue per operating
day 17,300 16,031 7.9 Number of service rigs (end of period) 238
239 - Service rig operating hours 335,108 344,315 (2.7) Service
revenue per operating hour 567 498 13.9
-------------------------------------------------------------------------
Hank Swartout, Precision's Chairman, President and Chief Executive
Officer, noted that "Precision's continuing operations have not
been impacted by the sale and trust conversion processes.
Ultimately, Precision is a service company and continues to focus
on what has made it successful, building and maintaining long-term
customer relationships. We will continue to work closely with our
customers this winter to ensure a safe, efficient, and mutually
successful drilling season." Rig demand remains extremely strong
and the wet weather conditions throughout the second quarter
further enhanced the situation in the third quarter as ground
conditions dried in July. The impact of this pent up demand
resulted in an outstanding quarter for revenues and earnings as the
backlog of wells to be drilled created a combination of positive
factors. First, winter pricing held up through the spring and into
the summer and second, whenever equipment became available there
were customers that were prepared to put it to work immediately.
This contributed to the 81% increase in operating earnings in the
third quarter of 2005 relative to 2004. Overall, the oil and gas
service industry will benefit from the pricing leverage established
from third quarter activity. Accordingly, increased pricing for the
winter season will take effect in the fourth quarter. All operating
divisions reported significant revenue increases year over year.
Well Servicing's 25% increase was somewhat lower than Contract
Drilling's 43% increase due to the natural time lag between
drilling and completing wells. Operating costs were lower as a
percentage of revenue despite crew wage increases that were
implemented in the fourth quarter of 2004. Operating expenses
declined from 58% of revenue in the third quarter of 2004 to 53% in
2005. Equipment repair and maintenance expenditures were lower on a
per day basis as scheduled expenditures were spread over a higher
activity level relative to last year. In addition, operating
expenses have not increased as much as customer pricing. General
and administrative costs for the third quarter were slightly higher
than the same period in 2004. As a percentage of revenue, general
and administrative costs fell to 5.5% from 6.4 %. General and
administrative costs should further decline as the corporate
function continues to be sized to meet the needs of Precision's
smaller business organization. Depreciation expense remained
relatively consistent as the impact of increased activity was
offset by the change in the estimated useful life of drilling rigs
from 4,150 to 5,000 utilization days effective January 1, 2005.
Certain statements contained in this press release, including
statements related to our proposed reorganization and the
Weatherford shares, and statements that may contain words such as
"anticipate", "could", "should", "expect", "believe", "will" and
similar expressions are not historical facts and are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve known
and unknown risks and uncertainties which may cause the actual
results, performance or achievements of Precision to be materially
different from any future results, performances or achievements
expressed or implied by such forward-looking statements. Such
factors include fluctuations in the market for oil- and gas- and
related products and services; competition; political and economic
conditions in countries in which Precision does business; the
demand for services provided by Precision; changes in laws and
regulations, including environmental regulations, to which
Precision is subject and other factors, which are described in
further detail in Precision's filings with the US Securities and
Exchange Commission. CONSOLIDATED STATEMENTS OF EARNINGS AND
RETAINED EARNINGS Three Months Ended Nine Months Ended CDN $000's,
except September 30, September 30, per share amounts (unaudited)
2005 2004 2005 2004
-------------------------------------------------------------------------
Revenue $ 300,016 $ 218,023 $ 841,318 $ 714,510 Expenses: Operating
158,581 127,109 449,694 406,242 General and administrative 16,486
13,942 56,495 44,951 Depreciation and amortization 18,923 17,488
52,096 53,209 Foreign exchange (5,930) (2,315) (6,448) (7,326)
-----------------------------------------------------------------------
188,060 156,224 551,837 497,076
-------------------------------------------------------------------------
Operating earnings 111,956 61,799 289,481 217,434 Interest
Long-term 11,971 13,107 36,238 31,414 Other 39 10 207 38 Income
(4,784) (165) (6,878) (299) Premium on redemption of bonds 65,483 -
65,483 - Unrealized loss in market value on short- term investments
20,262 - 20,262 - Gain on disposal of investments - (2,532) -
(2,574)
-------------------------------------------------------------------------
Earnings from continuing operations before income taxes 18,985
51,379 174,169 188,855 Income taxes: Current 171,612 10,978 216,299
44,992 Future (155,009) 3,406 (142,101) 16,314
-----------------------------------------------------------------------
16,603 14,384 74,198 61,306
-------------------------------------------------------------------------
Earnings from continuing operations 2,382 36,995 99,971 127,549
Discontinued operations, net of tax 1,380,266 5,712 1,447,046
31,672
-------------------------------------------------------------------------
Net earnings 1,382,648 42,707 1,547,017 159,221 Retained earnings,
beginning of period 1,206,052 910,793 1,041,683 794,279 Adjustment
on cash purchase of employee stock options, net of tax - $9,823
(18,741) - (18,741) -
-------------------------------------------------------------------------
Retained earnings, end of period $ 2,569,959 $ 953,500 $ 2,569,959
$ 953,500
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share from continuing operations: Basic $ 0.02 $ 0.31
$ 0.81 $ 1.12 Diluted $ 0.02 $ 0.31 $ 0.80 $ 1.11
-------------------------------------------------------------------------
Earnings per share: Basic $ 11.22 $ 0.36 $ 12.60 $ 1.40 Diluted $
11.00 $ 0.36 $ 12.36 $ 1.38
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares outstanding (000's) 123,883 121,346 123,883 121,346
Weighted average shares outstanding (000's) 123,285 118,308 122,778
113,688 Diluted shares outstanding (000's) 125,686 119,816 125,145
115,156 CONSOLIDATED BALANCE SHEETS September 30, December 31, CDN
$000's 2005 2004
-------------------------------------------------------------------------
(unaudited) Assets Current assets: Cash and cash equivalents $
1,585,247 $ 122,012 Marketable securities, at lower of cost or
market (market value - $2,072,749) 2,072,749 - Accounts receivable
356,335 309,292 Inventory 6,603 7,734 Other assets 7,742 - Assets
of discontinued operations - 497,036
-------------------------------------------
--------------------------- 4,028,676 936,074 Property, plant and
equipment, net of accumulated depreciation 925,112 897,584
Intangibles, net of accumulated amortization 487 498 Goodwill
266,827 266,827 Other assets - 9,116 Assets of discontinued
operations - 1,741,950
-------------------------------------------------------------------------
$ 5,221,102 $ 3,852,049
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity Current liabilities: Accounts
payable and accrued liabilities $ 153,240 $ 120,432 Income taxes
payable 161,705 13,624 Current portion of long-term debt 765,133 -
Liabilities of discontinued operations - 244,707
-----------------------------------------------------------------------
1,080,078 378,763 Long-term debt - 718,850 Future income tax
liability 212,167 354,268 Liabilities of discontinued operations -
78,427 Shareholders' equity: Share capital 1,323,709 1,274,967
Contributed surplus 35,189 26,024 Cumulative translation adjustment
- (20,933) Retained earnings 2,569,959 1,041,683
-----------------------------------------------------------------------
3,928,857 2,321,741
-------------------------------------------------------------------------
$ 5,221,102 $ 3,852,049
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares outstanding (000's) 123,883 121,580 Common share
purchase options outstanding (000's) 3,921 6,696 CONSOLIDATED
STATEMENTS OF CASH FLOW CDN $000's, except Three Months Ended Nine
Months Ended per share amounts September 30, September 30,
(unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
Cash provided by (used in): Continuing operations: Earnings from
continuing operations $ 2,382 $ 36,995 $ 99,971 $ 127,549 Items not
affecting cash: Stock-based compensation 1,812 2,619 7,276 5,562
Depreciation and amortization 18,923 17,488 52,096 53,209 Gain on
disposal of investments - (2,532) - (2,574) Premium on redemption
of bonds 65,483 - 65,483 - Unrealized loss in market value on
short-term investments 20,262 - 20,262 - Future income taxes
(155,009) 3,406 (142,101) 16,314 Amortization of deferred financing
costs 457 465 1,374 1,145 Unrealized foreign exchange gain on
long-term monetary items (9,057) (1,964) (9,060) (4,184)
-------------------------------------------------------------------------
Funds provided by (used in) continuing operations (54,747) 56,477
95,301 197,021 Changes in non-cash working capital balances 106,929
(34,941) 166,365 59,881
-------------------------------------------------------------------------
52,182 21,536 261,666 256,902
-------------------------------------------------------------------------
Discontinued operations: Funds provided by discontinued operations
53,330 48,516 195,877 123,317 Changes in non-cash working capital
balances of discontinued operations (21,286) (30,958) (69,550)
(71,202)
-------------------------------------------------------------------------
32,044 17,558 126,327 52,115 Investments: Business acquisitions,
net of cash acquired (30,421) (1,160) (30,421) (660,002) Purchase
of property, plant and equipment (77,155) (83,629) (238,605)
(192,610) Purchase of intangibles - (314) (20) (314) Proceeds on
sale of property, plant and equipment 8,941 13,371 26,062 24,617
Proceeds on disposal of investments - 5,829 - 5,877 Proceeds on
disposal of discontinued operations 1,306,280 8,553 1,306,280
49,299 Investments - 1,340 - -
-----------------------------------------------------------------------
1,207,645 (56,010) 1,063,296 (773,133)
-------------------------------------------------------------------------
Financing: Increase in long- term debt - - - 522,136 Repayment of
long- term debt (3) (161,994) (12) (173,257) Deferred financing
costs on long-term debt - (627) - (5,612) Issuance of common shares
on exercise of options 15,405 13,584 40,522 50,355 Issuance of
common shares, net of costs - 276,455 - 276,455 Purchase of
employee stock options (28,564) - (28,564) - Change in bank
indebtedness - (71,795) - (147,909)
-----------------------------------------------------------------------
(13,162) 55,623 11,946 522,168
-------------------------------------------------------------------------
Increase in cash and cash equivalents 1,278,709 38,707 1,463,235
58,052 Cash and cash equivalents, beginning of period 306,538
40,715 122,012 21,370
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,585,247 $ 79,422 $
1,585,247 $ 79,422
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CANADIAN DRILLING OPERATING STATISTICS Nine Months Ended September
30, 2005 2004
------------------------------------------------------------ Market
Market Precision Industry(x) Share % Precision Industry(x) Share %
------------------------------------------------------------ Number
of drilling rigs 229 738 31.0 226 686 32.9 Number of operating days
(spud to release) 32,587 109,477 29.8 29,526 92,896 31.8 Wells
drilled 5,783 17,288 33.5 5,644 15,981 35.3 Average days per well
5.6 6.3 5.2 5.8 Metres drilled (000's) 6,414 19,655 32.6 5,905
16,901 34.9 Average metres/day 197 180 200 182 Average metres/well
1,109 1,137 1,046 1,058 Rig utilization rate (%) 52.1 55.6 47.8
49.8 (x) Excludes non-CAODC rigs. A conference call to review the
third quarter 2005 results has been scheduled for 12:00 noon MST on
Thursday, October 27, 2005. The conference call dial-in number is
1-800-814-4861. A live webcast will be accessible at
http://www.precisiondrilling.com/ by selecting Investor Relations.
DATASOURCE: Precision Drilling Corporation CONTACT: Hank B.
Swartout, Chairman, President and Chief Executive Officer, 4200,
150 6th Avenue S.W., Calgary, Alberta, T2P 3Y7, Telephone: (403)
716-4500, Fax: (403) 264-0251; website:
http://www.precisiondrilling.com/; To request a free copy of this
organization's annual report, please go to http://www.newswire.ca/
and click on Tools for Investors.
Copyright