Precision Drilling Trust Announces 2010 Capital Expenditures, Rig Decommissioning, Debt Reductions and Distribution Status
16 Dicembre 2009 - 1:00PM
Marketwired
(Canadian dollars, except as noted)
Precision Drilling Trust ("Precision" or the "Trust") (TSX:
PD.UN) (NYSE: PDS) announced today its planned capital expenditures
for 2010 of approximately $75 million. This includes $50 million in
sustaining upgrade and infrastructure expenditures and is based
upon currently anticipated rig activity for 2010. In addition, $25
million is planned for performance improvements to certain rigs to
align with potential customer opportunities in unconventional
resource plays in Canada and the United States. These planned
expenditures will move 10 rigs from Precision's Tier 2
classification up to Tier 1 (Precision's Super Series) and will
move 3 to 5 rigs from Tier 3 to Tier 2 (Precision's high
performance rigs capable of drilling both directionally and
horizontally). There are currently no plans to build new rigs.
Precision announced today that it is decommissioning 38 drilling
rigs, of which 26 are part of the Canadian fleet, and 12 are part
of the United States fleet. All of these rigs are Tier 3 rigs.
Certain component parts of these decommissioned rigs will be used
in Precision's ongoing operations. The Trust is also
decommissioning 30 service rigs and nine snubbing units. In
conjunction with these decommissionings, the Trust will take a
non-cash, pre-tax charge to earnings in the range of $80 to $90
million for the fourth quarter of 2009. After this decommissioning,
Precision's rig fleet stands at 352 rigs, all of which are
marketable and can return to work in a short period of time without
additional capital. With the recent movement of three rigs to
Canada from the United States, Precision has 203 rigs in Canada,
146 rigs in the United States and three internationally.
"The combination of upgrading 13 to 15 of our existing drilling
rigs and permanently decommissioning 38 of our least efficient,
least profitable Tier 3 rigs significantly high grades the
Precision fleet. We expect to exit 2010 with over 72% of our fleet
as Tier 1, Super Series and Tier 2, horizontally capable, high
performance rigs", stated Kevin Neveu, President and Chief
Executive Officer. "This repositioning of the Precision fleet
supports our strategy of providing high performance, high value
services for the rapidly changing demands of our customers pursing
unconventional oil and gas reserves in our core markets. We remain
poised to further upgrade Tier 3 rigs or consider new build
opportunities when customer demand and contract economics fully
support additional investment."
Precision also announced that earlier in the fourth quarter the
Trust reduced its outstanding debt by a cash payment of US$75
million. Long-term debt at the end of November was $899 million,
with secured term loans of $724 million and an unsecured senior
note of $175 million. Since December 31, 2008, the Trust's
long-term debt balance has been reduced by $559 million through net
cash repayments. In conjunction with the voluntary repayment, the
Trust will have a non-cash, pre-tax charge to earnings in the
fourth quarter of 2009 of $8 million related to the amortization of
the deferred financing costs associated with this debt
reduction.
Mr. Neveu concluded, "Our top priority for 2009 was to
strengthen the Trust's balance sheet and this payment was another
step in the process. We have made significant improvement in our
capital structure during the year and this debt reduction priority
will carry over into 2010. Our goal is to continue to reduce
outstanding indebtedness while maintaining a strong liquidity
position to respond to customer opportunities in the North American
and international drilling markets."
Precision also announced today that its Board of Trustees is
continuing the indefinite suspension of cash distributions in order
to maintain focus on debt reduction, and there will not be a
special year-end distribution. The Board of Trustees is evaluating
and planning for the conversion of Precision from a trust to a more
traditional corporate structure. These plans are ongoing and it is
anticipated that this conversion will take place well ahead of new
Canadian tax measures for trusts slated for January 1, 2011.
Precision will provide additional information and details as they
become available.
With specific reference to goodwill impairment, Precision will
continue to monitor the business climate for a significant adverse
change from December 31, 2008, and will test for impairment at the
end of 2009. At September 30, 2009, Precision reported goodwill of
$772 million, of which $488 million related to the United States
contract drilling business unit.
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", "propose", "plan", "expect", "believe",
"will", "may" 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 level of capital expenditures
for 2010; the level of drilling activity for 2010; the use of
capital, including plans not to build new rigs; the number and type
of assets to be decommissioned; the future reductions of long-term
debt; the conversion of the trust structure to a corporate
structure; and the anticipated non-cash charges for the fourth
quarter of 2009.
These forward-looking information and statements are based on
certain assumptions and analysis made by the Trust 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 Trust'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 Trust'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 well
servicing; general economic, market or business conditions; changes
in laws or regulations, including taxation, environmental and
currency regulations; currency exchange fluctuations; and other
unforeseen conditions which could impact the use of services
supplied by Precision.
Consequently, all of the forward-looking information and
statements made in this press release are qualified by these
cautionary statements and there can be no assurance that the actual
results or developments anticipated by the Trust will be realized
or, even if substantially realized, that they will have the
expected consequences to, or effects on, the Trust 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 Trust assumes no obligation to
update publicly any such forward-looking information and
statements, whether as a result of new information, future events
or otherwise.
About Precision
Precision is a leading provider of safe, high performance energy
services to the North American oil and gas industry. Precision
provides customers with access to an extensive fleet of contract
drilling rigs, service rigs, camps, snubbing units, wastewater
treatment units and rental equipment backed by a comprehensive mix
of technical support services and skilled, experienced
personnel.
Precision is headquartered in Calgary, Alberta, Canada. The
Trust is listed on the Toronto Stock Exchange under the trading
symbol "PD.UN" and on the New York Stock Exchange under the trading
symbol "PDS".
Contacts: David Wehlmann, Executive Vice President, Investor
Relations Precision Drilling Corporation, Administrator of
Precision Drilling Trust (403) 716-4575 (403) 716-4755 (FAX)
Precision Drilling Trust 4200, 150 - 6th Avenue S.W. Calgary,
Alberta T2P 3Y7 www.precisiondrilling.com
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