Precision Drilling Corporation (TSX:PD) (NYSE:PDS)
(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.
Effective January 1, 2011, Precision Drilling Corporation
("Precision" or the "Corporation") began reporting its financial
results in accordance with International Financial Reporting
Standards ("IFRS"). Prior year comparative amounts have been
changed to reflect results as if Precision had always prepared its
financial results using IFRS.
Precision Drilling Corporation reported net earnings of $83
million or $0.29 per diluted share for the three months ended
September 30, 2011 compared to net earnings of $56 million or $0.20
per diluted share for the third quarter of 2010. Net earnings and
net earnings per diluted share for the quarter include the impact
of prior period income taxes, including the previously disclosed
income tax settlement with the Canada Revenue Agency ("CRA") and
expected Alberta provincial income tax reassessment, which
decreased net earnings and net earnings per diluted share by $26
million and $0.09, respectively. Additionally, Precision recognized
a foreign exchange gain that increased net earnings and net
earnings per diluted share by $25 million and $0.09,
respectively.
Revenue for the third quarter of 2011 was $493 million and
earnings before finance charges, income taxes, depreciation,
amortization and foreign exchange ("EBITDA") totalled $186 million
compared to $359 million and $113 million, respectively, during the
comparable period in 2010. The increase in revenue and EBITDA is a
result of increased drilling activity, increased pricing and new
asset additions over the prior year period.
Third quarter 2011 revenue and EBITDA were higher than the
second quarter 2011 revenue and EBITDA of $345 million and $93
million, respectively, due to continued strong oilfield service
activity across North America and the seasonality of oilfield
service in Canada known as spring break-up that takes place during
the second quarter. This is a time in Canada where heavy equipment
cannot change locations due to road bans and normally occurs in
March to June of each year. Although wet weather impaired activity
in Canada during the first part of the third quarter, activity
levels increased rapidly in August and September.
For the nine months ended September 30, 2011, Precision reported
net earnings of $165 million or $0.57 per diluted share compared to
net earnings of $44 million or $0.15 per diluted share for the same
period of 2010. Revenue for the first nine months of 2011 was
$1,364 million compared to $994 million for the corresponding
period of 2010. EBITDA totalled $465 million for the first nine
months of 2011 compared to $290 million for the same period of
2010. Higher activity levels and improved pricing in the Contract
Drilling Services and Completion and Production Services segments
have led to the period-over-period improvement. Activity for
Precision, as measured by drilling utilization days, increased 27%
in Canada and 19% in the United States for the first nine months of
the year compared with the same period in 2010.
Precision recently secured contracts or firm commitments for
four additional new build drilling rigs, which, combined with the
38 previously announced new build rigs, brings the 2011 new build
program to 42 rigs. Of the 42 rigs, 20 rigs are expected to be
deployed to U.S. markets and 22 rigs to the Canadian market.
Substantially all the 2011 new build program is expected to be
deployed over the next 12 months. Capital expenditures for 2011 are
expected to be $880 million with an additional $413 million
expected to be carried over to 2012 to complete the 2011 new build
program.
Precision recently contracted three rigs for operations in Saudi
Arabia to work on a long-term basis. These three rigs are from
Precision's existing fleet and are being upgraded by Precision with
all three rigs expected to be deployed in the first quarter
2012.
Kevin Neveu, Precision's President and Chief Executive Officer,
stated: "I am pleased with our third quarter results, both top line
revenue growth and the improved pricing and operating margins
Precision's business groups are achieving. It is most encouraging
that customer demand for Precision's High Performance, High Value
services remains strong despite the economic uncertainty we began
to experience in the third quarter. I believe it is particularly
important to note that the four new build rigs announced today, the
three international rig deployments and the eight new builds
announced earlier this month were all committed to by our customers
over the past three months. These new builds announced this month
will be delivered well into 2012 demonstrating a long-term view by
our customers on the viability and growth of unconventional oil and
natural gas resource development in North America."
"In addition to expanding the North American and international
drilling rig fleet this past quarter, Precision made several steps
toward achieving its strategic objectives, including enhancing its
balance sheet by securing additional long-term debt at attractive
rates, expanding its directional drilling service offering through
the acquisition of Axis Energy Services and strengthening the
vertical integration strategy through the opening of the Houston
Technology Center, the headquarters for the rig up, repair,
maintenance and training for Precision's United States operations.
Precision continues to see the benefits of vertical integration
through higher operating margins and the market enthusiasm for
Precision Super Series rigs."
"The Precision designed Super Triple rigs, the ST 1200 and the
ST 1500, have proven extremely successful in the North American
marketplace and we believe this design has supported the company's
gain of a disproportionate share of the North American new build
market. Precision's ST 1200 was first introduced into the Marcellus
in mid-2011 and the success of the design has led to Precision
signing contracts for 10 more ST 1200 new builds. The extension of
this design led to the development of the ST 1500, which has proven
just as successful, accounting for 12 of our 51 contracted new
builds since the beginning of 2010."
"Additionally, the company is capitalizing on growth
opportunities in select international markets where customers value
Precision's High Performance, High Value services. Our deployment
of three desert-capable drilling rigs to drill deep gas wells in
Saudi Arabia is indicative of the potential for Precision to expand
its services in select international markets. The company will
continue to look for new opportunities to expand."
"While Precision's Canadian activity was hampered by an extended
spring break-up in the beginning of third quarter, activity levels
rebounded in the last two months of the quarter and are now
approaching levels experienced during this past winter drilling
season and recent historical highs for the third quarter. Demand
for Precision's services in Canada and the United States is
expected to continue the upward trend of the last several quarters
as drilling and well servicing activity continues to grow."
"Precision continues to see high levels of customer demand in
Canada and the United States for additional Super Series rigs and
expects this interest could result in additional new build and
upgrade rig contracts during the last two months of the year and
into 2012. These new build rigs are delivered to customers on a
long-term contract basis and at attractive rates of return for
Precision. As of October 21, 2011, nine 2011 new build rigs have
been delivered and another nine are expected to be delivered by the
end of the year with 24 expected to be delivered in 2012."
"Precision has expanded its rig manufacturing capacity to three
rigs per month in an effort to meet market demand for Super Series
rigs. With today's announcement, the company has announced 51 Tier
1 new build rigs in the past 15 months. In addition, Precision is
utilizing its internal manufacturing capabilities to upgrade up to
20 rigs within its existing fleet during 2011 with approximately 15
of the upgrades consisting of tier upgrades."
"Due to lower turnkey drilling activity and associated revenue,
Precision's average revenue per day in the United States in the
third quarter of 2011 was lower than the second quarter of 2011 by
$1,060. Absent the turnkey drilling effect in the third quarter,
dayrates continued the upward trend of the past several quarters.
Precision expects dayrates to continue to increase through the
fourth quarter of this year."
"To start the third quarter of 2011 Precision had 84 rigs
working in Canada while we ended the quarter with 138. Despite
industry labour concerns, Precision was able to effectively staff
rigs with well trained crews during the activity ramp up this
quarter. Precision expects to be able to continue to effectively
staff rigs throughout this winter drilling."
"Precision also continues to see strong demand for services and
equipment provided by the Completion and Production Services
segment. Precision's service rig fleet worked 83% more hours during
the third quarter of 2011 as compared to the second quarter of
2011, and 14% more hours than the third quarter of 2010. Oil
related work, which is more service intensive, is where the vast
majority of the service rig hours were achieved during the third
quarter of 2011. The segment generated EBITDA of $28 million during
the third quarter of 2011, up 68% from last year. This improvement
was driven by an increase in average hourly servicing rates as well
as strong results from the rentals, and camp and catering
divisions. Precision expects the activity levels and financial
performance of the Completion and Production Services segment to
continue to improve throughout the year and end the year
meaningfully above 2010 performance."
"Precision remains well positioned to react to changes in
customer spending while remaining ready to seize opportunities to
deploy capital at attractive rates of return and to expand our
drilling, directional drilling, Completion and Production and
international presence during the remainder of 2011 and into 2012",
concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING INFORMATION
(Stated in
thousands of Three months ended Nine months ended
Canadian dollars, September 30, September 30,
except per share % %
amounts) 2011 2010 Change 2011 2010 Change
----------------------------------------------------------------------------
Revenue $ 492,944 $ 359,152 37.3 $1,363,619 $ 994,116 37.2
EBITDA(1) 186,248 112,607 65.4 465,225 290,390 60.2
Net earnings 83,468 56,286 48.3 165,431 43,785 277.8
Cash provided by
operations 20,281 67,575 (70.0) 313,915 231,200 35.8
Capital spending:
Upgrade capital
expenditures 83,085 29,323 183.3 164,263 50,714 223.9
Expansion capital
expenditures 136,591 6,463 2013.4 234,107 14,239 1544.1
Proceeds on sale (4,610) (2,072) 122.5 (8,694) (9,371) (7.2)
--------------------------------------------------------
Net capital
spending 215,066 33,714 537.9 389,676 55,582 601.1
Net earnings per
share:
Basic 0.30 0.20 50.0 0.60 0.16 275.0
Diluted 0.29 0.20 45.0 0.57 0.15 280.0
Contract drilling
rig fleet 366 353 3.7 366 353 3.7
Drilling rig
utilization days:
Canada 10,505 7,557 39.0 27,246 21,446 27.0
United States 9,716 8,512 14.1 28,053 23,535 19.2
International 177 153 15.7 530 498 6.4
Service rig fleet 220 220 - 220 220 -
Service rig
operating hours 85,378 74,734 14.2 228,059 209,540 8.8
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
FINANCIAL POSITION AND RATIOS
(Stated in thousands of Canadian dollars, September 30, December 31,
except ratios) 2011 2010
----------------------------------------------------------------------------
Working capital $ 731,822 $ 458,003
Long-term debt(1) $ 1,262,038 $ 804,494
Total long-term financial liabilities $ 1,287,795 $ 834,813
Total assets $ 4,351,524 $ 3,564,540
Long-term debt to long-term debt plus equity
ratio(1) 0.37 0.29
----------------------------------------------------------------------------
Precision's average active rig count of 108 rigs in the United
States and international for the third quarter of 2011 was up 13
rigs over the same period in 2010 and 4 rigs over the second
quarter of 2011. Precision expects its active rig count to modestly
increase over the coming months as its new build and upgraded rigs
enter the market.
In Canada, Precision averaged 114 rigs operating during the
third quarter of 2011, up 32 rigs over the same period in 2010 and
68 rigs over the second quarter of 2011. With higher levels of
market activity and new build rigs entering the fleet, Precision
expects its active rig count during the winter drilling season to
surpass levels achieved last winter drilling season.
Revenue in the third quarter of 2011 was $134 million higher
than the prior year period. The increase was mainly due to a
period-over-period increase in rates and drilling utilization days
in both Canada and the United States. Revenue in Precision's
Contract Drilling Services segment increased by 38% while revenue
increased 37% in the Completion and Production Services segment in
the third quarter of 2011 compared to the prior year.
EBITDA margin (EBITDA as a percentage of revenue) was 38% for
the third quarter of 2011 compared to 31% for the same period in
2010. The increase in EBITDA margin was primarily attributable to
higher utilization and higher average dayrates in both Canada and
the United States in the third quarter of 2011 versus the prior
year period. Precision's term contract position with customers, a
highly variable operating cost structure and economies achieved
through vertical integration of the supply chain continue to
support EBITDA margins.
To align with the management of the operating divisions,
Precision now considers the camp and catering division to be within
the Completion and Production Services segment and prior period
numbers have been reclassified to reflect this change. In the
Contract Drilling Services segment, Precision currently owns 367
contract drilling rigs, including 206 in Canada, 158 in the United
States and 3 rigs in international locations. Precision's
Completion and Production Services segment includes 200 service
rigs, 20 snubbing units, 83 wastewater treatment units, 81 drilling
and base camps and a broad mix of rental equipment.
On September 9, 2011 Precision closed the acquisition of Axis
Energy Services Holdings Inc. ("Axis"). Axis provides directional
drilling and MWD services, primarily in Western Canada and has a 30
job capacity. Axis was formed in 2006 and had approximately 70
employees.
As previously disclosed in a news release on September 6, 2011,
Precision reached an agreement with the CRA to resolve an income
tax reassessment made by the CRA and disputed by Precision. Based
on the settlement agreement, Precision received an income tax
reassessment from the CRA of $26 million federal tax plus interest
of $11 million. The anticipated reassessed total of $37 million is
$170 million less than the February 2011 reassessment and will
result in a refund of approximately $72 million to Precision. As
part of the settlement agreement, Precision has waived all rights
to appeal the reassessment. Additionally, Precision anticipates
that the CRA settlement should result in an Alberta provincial
income tax reassessment and interest charges totaling $13 million
for total charges of $50 million.
On July 26, 2011 Precision completed an offering of US$400
million aggregate principal 6.50% senior unsecured notes due 2021
in a private placement. Precision is using the net proceeds from
the offering to fund its capital expenditure program and for
general corporate purposes.
Oil prices were higher and natural gas prices were lower during
the third quarter of 2011 compared with the year ago period. For
the third quarter of 2011, West Texas Intermediate crude oil
averaged US$89.59 per barrel, 18% higher when compared to US$75.97
per barrel in the same period in 2010. AECO natural gas spot prices
averaged $3.66 per MMBtu, 13% lower than the third quarter 2010
average of $4.21 per MMBtu. In the United States, Henry Hub natural
gas spot prices averaged US$4.12 per MMBtu in the third quarter of
2011, a decrease of 4% over the third quarter 2010 average of
US$4.28 per MMBtu.
Summary for the three months ended September 30, 2011:
-- Operating earnings were $122 million and 25% of revenue, compared to $58
million and 16% of revenue in the third quarter of 2010. Operating
earnings were positively impacted by the increase in activity and rates
in the majority of Precision's operations.
-- General and administrative expenses were $24 million, in line with the
third quarter of 2010. Increased costs associated with higher activity
were offset by lower incentive compensation costs tied to the price of
Precision's common shares.
-- Finance charges were $34 million, an increase of $12 million from the
third quarter of 2010. The increase was due to $15 million of interest
expense associated with the CRA income tax settlement and expected
Alberta provincial income tax reassessment and higher debt levels during
the period offset by the third quarter of 2010 which included finance
charges of $7 million relating to higher amortization of debt issue
costs.
-- Funds provided by operations in the third quarter of 2011 were $73
million, a decrease of $54 million from the prior year comparative
quarter of $127 million. The decrease was due to the current period re-
characterization of the February 2011 CRA cash payment of $108 million
from an investment activity on the statement of cash flow to an
operating activity with the agreed to settlement partially offset by
stronger operating results.
-- In November 2010 and again in August 2011 with the new 6.5% senior
unsecured notes, Precision has designated its U.S. dollar denominated
long-term debt as a hedge against its net investment in its United
States operations. As a result, for the first nine months of 2011 the
gain on translation of the U.S. denominated long-term debt is recognized
in comprehensive income while in the comparative period it was
recognized as an expense in the period. During the third quarter, the
Canadian dollar weakened in relation to the U.S. dollar giving rise to a
foreign exchange gain of $34 million on the net U.S. dollar denominated
monetary position held in the Canadian based operations.
-- Capital expenditures for the purchase of property, plant and equipment
were $220 million in the third quarter, an increase of $184 million over
the same period in 2010. Capital spending for the third quarter of 2011
included $137 million for expansion capital and $83 million for the
maintenance and upgrade of existing assets.
-- Average revenue per utilization day for contract drilling rigs increased
in the third quarter of 2011 to US$21,020 from the prior year third
quarter of US$18,914 in the United States and increased in Canada to
$17,615 in the third quarter of 2011 from $15,686 for the third quarter
of 2010. The increase in revenue rates for the third quarter in Canada
and the United States reflects a greater proportion of Tier 1 and Tier 2
rigs working and the pricing leverage of higher overall industry
utilization compared to the prior year quarter. In Canada, for the third
quarter of 2011, 35% of Precision's utilization days were achieved from
drilling rigs working under term contracts compared to 31% in the 2010
comparative period. In the United States, for the third quarter of 2011,
79% of Precision's utilization days were generated from rigs working
under term contracts compared to 57% in the 2010 comparative period.
Turnkey revenue for the third quarter of 2011 was US$7 million compared
with US$15 million in 2010. Within Precision's Completion and Production
Services segment, average hourly rates for service rigs were $678 in the
third quarter of 2011 compared to $605 in the third quarter of 2010.
-- Average operating costs per utilization day for drilling rigs increased
in the third quarter of 2011 to US$12,467 from the prior year third
quarter of US$12,429 in the United States and increased from $8,303 in
2010 to $8,922 in Canada. The cost increase in the United States was
primarily due to a labour rate increase that became effective in
December 2010 partially offset by 2011 cost control initiatives. The
cost increase in Canada was primarily due to a labour rate increase that
became effective in the fourth quarter of 2010 and higher repairs and
maintenance costs in preparation for an expected busy winter drilling
season. Within Precision's Completion and Production Services segment,
average hourly operating costs for service rigs increased to $484 in the
third quarter of 2011 as compared to $439 in the third quarter of 2010
primarily due to a labour rate increase and higher maintenance costs to
prepare for increased activity. Typically, labour rate increases are
recovered in dayrate increases.
Summary for the nine months ended September 30, 2011:
-- Revenue for the first nine months of 2011 was $1,364 million an increase
of 37% over the 2010 period.
-- Operating earnings were $285 million, an increase of $146 million or
105% over 2010. Operating earnings were 21% of revenue in 2011 compared
to 14% in 2010.
-- General and administrative costs were $89 million, an increase of $16
million over the first nine months of 2010 primarily because of the
increased accruals for stock-based compensation in 2011.
-- Finance charges were $93 million, a decrease of $10 million from the
first nine months 2010 due to lower interest costs and lower
amortization of debt issue costs partially offset by interest expense
associated with the CRA income tax settlement and expected Alberta
provincial income tax reassessment. During 2011 Precision refinanced
$175 million 10% senior unsecured notes resulting in a charge of $27
million for the make-whole premium while 2010 includes a loss on
settlement of debt facilities of $25 million.
-- Funds provided by operations for the nine months of 2011 were $336
million, an increase of $66 million from the prior year comparative
quarter of $270 million. The increase was due to stronger operating
results compared to the prior year period partially offset by the
February 2011 CRA cash payment of $108 million and the re-
characterization of this amount in the statement of cash flow.
-- Capital expenditures for the purchase of property, plant and equipment
were $398 million in the first nine months of 2011, an increase of $333
million over the same period in 2010. Capital spending for 2011 to date
included $234 million for expansion capital and $164 million for the
maintenance and upgrade of existing assets.
OUTLOOK
Precision has a strong portfolio of long-term customer contracts
that provides a base level of activity and revenue. Precision
expects to have an average of approximately 130 rigs committed
under term contracts in North America in the fourth quarter of
2011, an average of 114 rigs contracted for the first quarter of
2012 and 96 for the second quarter of 2012. In Canada, term
contracted rigs normally generate 250 utilization days per rig year
due to the seasonal nature of well access, whereas in the United
States they generate about 365 utilization days per rig year in
most regions.
For 2011, based on current drilling rig contracts, Precision
expects to average 44 rigs in Canada under term contract and 78 in
the United States and internationally. For 2012, Precision
currently has term contracts in place for an average of 89 rigs,
with 47 in Canada and 42 in the United States and internationally.
Since the second quarter 2011 earnings release, Precision has added
term contracts that increased the average for 2011 from 116 rigs to
123 rigs working under term contract and from 67 to 89 rigs under
term contract for 2012.
Capital expenditures are expected to be approximately $880
million for 2011, of which $398 million was expended during the
first nine months of 2011. The 2011 total includes $144 million for
sustaining and infrastructure expenditures and is based upon
currently anticipated activity levels for 2011. Additionally, $508
million is slated for expansion capital and includes the cost to
complete the drilling rigs from the 2010 new build rig program and
a portion of the new build rigs for 2011. The total capital
expenditures also include an estimated $228 million to upgrade 15
to 20 rigs in 2011 and to purchase long lead time items for the
Corporation's capital inventory. These long lead time items include
top drives, masts and engines, that can be used for North American
or international new build rig opportunities and rig tier upgrades.
Precision expects that the $880 million will be split $790 million
for the Contract Drilling segment and $90 million for the
Completion and Production Services segment. An additional $413
million of capital expenditures is expected to carry forward to
2012 to complete the 2011 new build rig program.
Demand remains very strong for additional Tier 1 Super Series
rigs for both Canada and the United States. Precision believes that
customer demand, specifically for those operating in the Bakken,
Eagle Ford, West Texas, Niobrara, Marcellus and Utica, will result
in additional new build rig opportunities. Oil and liquids rich
plays in Canada, such as the Cardium, Viking, Duvernay and heavy
oil, will also provide additional opportunities for new build rigs.
Precision continues to see attractive opportunities to upgrade
lower tier rigs in both Canada and the United States.
To date in 2011, there has been substantially higher drilling
activity in Canada and the United States than in the prior year.
Precision believes that oil and liquids rich natural gas directed
drilling will continue to drive Tier 1 and Tier 2 rig counts higher
in North America. Precision believes the vast majority of oil and
liquids plays are economic at oil prices below those experienced
over the past 12 months. According to industry sources, as at
October 14, 2011, the United States active land drilling rig count
was up about 21% from the same point in the prior year while the
Canadian drilling rig count had also increased about 21%. With the
period-over-period improvements in rig utilization, there have been
recent improvements in spot market dayrates charged to customers in
both Canada and in the United States. The dayrate improvement trend
witnessed over the past several quarters is expected to continue
through the fourth quarter of this year.
Natural gas production in the United States has remained strong
despite reduced drilling activity over the past two years. The
United States natural gas storage levels as at October 7, 2011 were
2% above the five-year average and 2% below storage levels of a
year ago. This also strongly influences Canadian activity since
Canada exports a significant portion of its natural gas production
to the United States. The increase in oil and liquids rich natural
gas drilling in areas like West Texas, Bakken and Eagle Ford has
resulted in the United States oil rig count as at October 14, 2011
to be 55% higher than it was a year ago. Precision has more
equipment working in oil related plays than at any time in the last
20 years, while approximately 30% of Precision's active rig count
is drilling for natural gas targets.
With high storage levels, consistent production and the view
that North America has an oversupply of natural gas, natural gas
prices have remained at relatively low levels. 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. With
the current demand for oil and liquids rich natural gas drilling,
Precision believes further reductions in natural gas directed
drilling would continue to be mostly offset by increases in oil and
liquids rich natural gas drilling.
Precision is encouraged by the recent strong activity levels in
our business and is excited about the first half of 2012, which we
believe represents an opportunity to demonstrate our value to
customers by providing High Performance, High Value services that
deliver low customer well costs and strong margins to
Precision.
SEGMENTED FINANCIAL RESULTS
To align with the management of the operating divisions,
Precision now considers the camp and catering division to be within
the Completion and Production Services segment. Precision views its
corporate segment as a support function that provides assistance to
more than one segment. Beginning with the first quarter of 2011
Precision has included United States based corporate costs,
previously included in Contract Drilling Services, in the Corporate
and Other segment. Prior period numbers have been restated to
reflect these changes. 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, rental, camp and
catering and wastewater treatment divisions.
Three months ended Nine months ended
(Stated in September 30, September 30,
thousands of % %
Canadian dollars) 2011 2010 Change 2011 2010 Change
----------------------------------------------------------------------------
Revenue:
Contract Drilling
Services $ 413,131 $ 300,002 37.7 $1,137,640 $ 828,592 37.3
Completion and
Production
Services 83,153 60,612 37.2 234,960 173,791 35.2
Inter-segment
eliminations (3,340) (1,462) 128.5 (8,981) (8,267) 8.6
----------------------------------------------------------------------------
$ 492,944 $ 359,152 37.3 $1,363,619 $ 994,116 37.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
(Stated in September 30, September 30,
thousands of % %
Canadian dollars) 2011 2010 Change 2011 2010 Change
----------------------------------------------------------------------------
EBITDA(1)
Contract Drilling
Services $ 171,950 $ 108,924 57.9 $ 448,669 $ 290,491 54.5
Completion and
Production
Services 28,010 16,642 68.3 70,694 41,255 71.4
Corporate and Other (13,712) (12,959) 5.8 (54,138) (41,356) 30.9
----------------------------------------------------------------------------
$ 186,248 $ 112,607 65.4 $ 465,225 $ 290,390 60.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
SEGMENT REVIEW OF CONTRACT DRILLING SERVICES
(Stated in thousands of Three months ended
Canadian dollars, except where September 30,
noted) 2011 2010 % Change
----------------------------------------------------------------------------
Revenue $ 413,131 $ 300,002 37.7
Expenses:
Operating 233,957 182,421 28.3
General and administrative 7,224 8,657 (16.6)
----------------------------------------------------------------------------
EBITDA(1) 171,950 108,924 57.9
Depreciation 56,158 46,008 22.1
----------------------------------------------------------------------------
Operating earnings(1) $ 115,792 $ 62,916 84.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings as a
percentage of revenue 28.0% 21.0%
----------------------------------------------------------------------------
Drilling rig revenue per
utilization day in Canada $ 17,615 $ 15,686 12.3
----------------------------------------------------------------------------
Drilling rig revenue per
utilization day in the United
States(2) US$ 21,020 US$ 18,914 11.1
----------------------------------------------------------------------------
(Stated in thousands of
Canadian dollars, except where Nine months ended
noted) September 30,
2011 2010 % Change
----------------------------------------------------------------------------
Revenue $1,137,640 $ 828,592 37.3
Expenses:
Operating 665,035 513,891 29.4
General and administrative 23,936 24,210 (1.1)
----------------------------------------------------------------------------
EBITDA (1) 448,669 290,491 54.5
Depreciation 156,631 127,976 22.4
----------------------------------------------------------------------------
Operating earnings(1) $ 292,038 $ 162,515 79.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings as a
percentage of revenue 25.7% 19.6%
----------------------------------------------------------------------------
Drilling rig revenue per
utilization day in Canada $ 17,840 $ 15,681 13.8
----------------------------------------------------------------------------
Drilling rig revenue per
utilization day in the United
States(2) US$ 21,302 US$ 18,792 13.4
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
(2) Includes revenue from idle but contracted rig days and lump sum payouts.
Three months ended September 30,
Canadian onshore
drilling statistics:(1) 2011 2010
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs
(end of period) 205 810 202 805
Drilling rig operating
days (spud to release) 9,487 40,763 6,816 29,575
Drilling rig operating
day utilization 51% 55% 37% 40%
Number of wells drilled 1,005 3,601 820 3,178
Average days per well 9.4 11.3 8.3 9.3
Number of metres drilled
(000s) 1,594 6,787 1,288 5,422
Average metres per well 1,586 1,885 1,571 1,706
Average metres per day 168 167 189 183
----------------------------------------------------------------------------
Nine months ended September 30,
Canadian onshore
drilling statistics:(1) 2011 2010
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs
(end of period) 205 810 202 805
Drilling rig operating
days (spud to release) 24,393 104,108 19,315 82,941
Drilling rig operating
day utilization 44% 48% 35% 38%
Number of wells drilled 2,492 8,634 2,077 7,902
Average days per well 9.8 12.1 9.3 10.5
Number of metres drilled
(000s) 3,936 16,052 3,457 13,757
Average metres per well 1,579 1,859 1,665 1,741
Average metres per day 161 154 179 166
----------------------------------------------------------------------------
(1) Canadian operations only.
(2) Canadian Association of Oilwell Drilling Contractors ("CAODC") and
Precision - excludes non-CAODC rigs and non-reporting CAODC members.
United States onshore
drilling statistics:(1) 2011 2010
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Average number of active
land rigs for quarters
ended:
March 31 100 1,695 78 1,297
June 30 102 1,803 88 1,464
September 30 106 1,915 93 1,603
----------------------------------------------------------------------------
Year to date average 103 1,805 86 1,463
----------------------------------------------------------------------------
(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.
Contract Drilling Services segment revenue for the third quarter
of 2011 increased by 38% to $413 million and EBITDA increased by
58% to $172 million compared to the same period in 2010. The
increase in revenue and EBITDA was due to the higher drilling rig
activity and higher average rates per day for both Canada and the
United States.
Activity in North America was impacted by increased customer
demand for oil related drilling activity as a result of higher
global oil prices. In the third quarter, drilling rig revenue per
utilization day in Canada was up 12% over the prior year while in
the United States drilling rig revenue per utilization day was up
11%. The increase in average dayrates for both Canada and the
United States was the result of increased rig demand. During the
quarter, 35% of Precision's utilization days in Canada were
generated from rigs under term contract compared with 32% in 2010
while in the United States 79% of utilization days were generated
from rigs under term contract as compared to 57% in the prior year
period. At the end of the quarter, Precision had 83 drilling rigs
working under term contracts in the United States and 50 in
Canada.
Drilling rig utilization days in Canada (drilling days plus move
days) during the third quarter of 2011 were 10,505, an increase of
39% compared to 7,557 in 2010. Drilling rig utilization days for
Precision in the United States were 14% higher than the same
quarter of 2010 due to increased customer demand with the majority
of the additional activity coming from oil and liquids rich natural
gas related plays. On average, Precision had two rigs working
internationally during the third quarter of 2011 the same as the
corresponding quarter of 2010.
Contract Drilling Services segment operating costs were 57% of
revenue for the quarter which is four percentage points lower than
the prior year period. 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 effective October 2010.
Operating costs for the quarter in the United States on a per day
basis were marginally up from the comparable period in 2010 due to
a crew wage increase effective December 2010 offset by a reduction
in costs resulting from 2011 cost control initiative.
Quarterly depreciation in the Contract Drilling Services segment
increased 22% from the prior year due to the increase in activity
in both Canada and the United States and $2 million of depreciation
in 2011 recorded on idle contract drilling assets. Both the United
States and Canadian contract drilling operations use the unit of
production method of calculating depreciation.
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES
(Stated in thousands Three months ended Nine months ended
of Canadian September 30, September 30,
dollars, except % %
where noted) 2011 2010 Change 2011 2010 Change
----------------------------------------------------------------------------
Revenue $ 83,153 $ 60,612 37.2 $ 234,960 $ 173,791 35.2
Expenses:
Operating 51,750 41,523 24.6 153,212 125,277 22.3
General and
administrative 3,393 2,447 38.7 11,054 7,259 52.3
----------------------------------------------------------------------------
EBITDA(1) 28,010 16,642 68.3 70,694 41,255 71.4
Depreciation 6,676 6,432 3.8 18,830 17,867 5.4
----------------------------------------------------------------------------
Operating
earnings(1) $ 21,334 $ 10,210 109.0 $ 51,864 $ 23,388 121.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings
as a percentage of
revenue 25.7% 16.8% 22.1% 13.5%
----------------------------------------------------------------------------
Well servicing
statistics:(2)
Number of service
rigs (end of
period) 220 220 - 220 220 -
Service rig
operating hours 85,378 74,734 14.2 228,059 209,540 8.8
Service rig
operating hour
utilization 42% 37% 38% 35%
Service rig revenue
per operating hour $ 678 $ 605 12.1 $ 689 $ 619 11.3
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
(2) Now includes snubbing services. Comparative numbers have been restated
to reflect this change.
Completion and Production Services segment revenue for the third
quarter increased by 37% from the third quarter of 2010 to $83
million and EBITDA increased by 68% to $28 million. The increase in
revenue and EBITDA is attributable to increased activity in all of
the divisions as customers increase spending in response to higher
oil and natural gas liquids commodity prices.
Well servicing activity increased 14% from the prior year
period, with the fleet generating 85,378 operating hours in the
third quarter of 2011 compared with 74,734 hours in the prior year
quarter for utilization of 42% and 37%, respectively. The increase
was a result of increased service rig activity due to completion
and production work on oil wells. Approximately 92% of the third
quarter service rig activity was oil related. Precision's rental
division activity was 78% higher than the prior year comparative
period primarily due to completion related activity and new
equipment added to the fleet. Precision's camp and catering
division benefited from an 80-man base camp in Canada that is
contracted to the end of 2011 and increased drill camp
activity.
Average service rig revenue increased $73 per operating hour to
$678 from the prior year period due to increased labour and fuel
costs passed through to the customer.
Operating costs as a percentage of revenue decreased to 62% in
the third quarter of 2011 from 69% in the same period of 2010.
Operating costs per service rig operating hour increased over the
comparable period in 2010 due primarily to higher wages and higher
maintenance costs to prepare for increased activity.
Depreciation in the Completion and Production Services segment
in the third quarter of 2011 was 4% higher than the prior year due
to increased activity. The well servicing division uses the unit of
production method of calculating depreciation while the other
operating divisions 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. Beginning with the
first quarter of 2011 Precision has included United States based
corporate costs, which were previously in the Contract Drilling
Services segment, in the corporate segment and restated prior
period comparatives. The Corporate and Other segment had an EBITDA
loss of $14 million for the third quarter of 2011, $1 million
higher than the prior year comparative period due to increased
costs associated with higher activity offset by lower share based
performance incentive costs.
OTHER ITEMS
Net financial charges for the quarter were $34 million, an
increase of $12 million from the third quarter of 2010 due to $15
million in interest on the CRA income tax settlement and expected
Alberta provincial income tax charges, higher long-term debt
interest expense of $4 million offset by $6 million of higher debt
amortization costs in 2010.
Finance charges for the three and nine month periods ended
September 30, 2011 and 2010 are as follows:
Three months
ended Nine months ended
September 30, September 30,
(Stated in thousands of Canadian
dollars) 2011 2010 2011 2010
----------------------------------------------------------------------------
Interest:
Long-term debt $ 18,942 $ 14,533 $ 48,415 $ 51,893
Tax settlement and reassessment 14,621 - 14,621 -
Other 55 31 101 63
Income (317) (337) (735) (534)
Amortization of debt issue costs 931 7,017 2,462 24,777
Debt amendment fees - - 1,134 -
Loss on settlement of debt
facilities - 604 26,942 25,030
Accelerated amortization of debt
issue costs from voluntary debt
repayments - - - 1,590
----------------------------------------------------------------------------
Finance charges $ 34,232 $ 21,848 $ 92,940 $102,819
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The Corporation had a foreign exchange gain of $34 million
during the third quarter of 2011 due to the strengthening 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.
Precision's effective tax rate on earnings before income taxes
for the first nine months of 2011 was 26% compared to 8% in the
same period of the prior year. The higher effective tax rate for
2011 is primarily the result of higher earnings as compared to
prior period and the impact in the prior period of 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
of 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
$501 million and the US$550 million senior secured revolving credit
facility ("Secured Facility") remains undrawn except for US$23
million in outstanding letters of credit as at September 30, 2011.
Subject to certain conditions, the Secured Facility may be
increased by an additional US$100 million. In addition to the
Secured Facility, Precision has available $40 million in operating
facilities which are used for working capital management.
During July 2011, Precision closed an offering of US$400 million
aggregate principal amount of 6.5% senior unsecured notes due 2021
(the "6.5% Senior Notes due 2021") in a private placement. Net
proceeds from the 6.5% Senior Notes due 2021 offering will be used
for capital expenditures and general corporate purposes.
During June 2011, Precision entered into an amendment to its
Secured Facility which: (i) reduced the margins and rates
applicable to interest rates and fees payable under the Secured
Facility; (ii) extended the maturity date of the Secured Facility
to November 17, 2015 from November 17, 2013; (iii) increased the
amount of unsecured indebtedness permitted to be incurred under the
Secured Facility; (iv) increased the consolidated senior debt to
EBITDA ratio from 2.5:1 to 3:1; and (v) increased the consolidated
total debt to EBITDA ratio from 3.5:1 to 4:1.
During March 2011, Precision issued $200 million aggregate
principal amount of 6.5% senior unsecured notes due 2019 in a
private placement. The net proceeds and cash on hand were in effect
used to repay the $175 million 10% senior unsecured notes. The
total repayment of approximately $204 million included the $175
million in principal, accrued interest and a make-whole premium.
The make-whole premium of $27 million was a charge to earnings in
the first quarter of 2011.
During November 2010, Precision closed an offering of US$650
million aggregate principal amount of 6.625% senior unsecured notes
due 2020 (the "6.625% Senior Notes due 2020") in a private
placement. Net proceeds from the 6.625% Senior Notes due 2020
offering were used to repay in full the outstanding indebtedness
under the Corporation's then existing term loan A and term loan B
credit facilities. At that time, the outstanding balance under the
term loan A credit facility was approximately US$263 million and
the outstanding balance under the term loan B credit facility was
approximately US$318 million. In conjunction with the closing of
the 6.625% Senior Notes due 2020 offering, Precision terminated its
then existing secured credit facilities and entered into the
Secured Facility. Subject to certain conditions, the new Secured
Facility may be increased by an additional US$100 million.
As at September 30, 2011 and December 31, 2010 Precision had the
following long-term debt balances:
September 30, December 31,
(Stated in thousands of Canadian dollars) 2011 2010
--------------------------------------------------------------------------
Senior secured revolving credit facility $ - $ -
Unsecured senior notes:
6.625% senior notes due 2020 (US$650 million) 675,285 646,490
6.5% senior notes due 2021 (US$400 million) 415,560 -
6.5% senior notes due 2019 200,000 -
10.0% senior notes - 175,000
--------------------------------------------------------------------------
1,290,845 821,490
Less net unamortized debt issue costs (28,807) (16,996)
--------------------------------------------------------------------------
$ 1,262,038 $ 804,494
--------------------------------------------------------------------------
--------------------------------------------------------------------------
As at September 30, 2011, the Corporation was in compliance with
the covenants under the Secured Facility and expects to remain in
compliance with such covenants and have complete access to credit
lines during the remainder of 2011.
The current blended cash interest cost of Precision's debt is
approximately 6.57% compared to 7.30% as at December 31, 2010.
In November 2010 and again in July 2011 Precision 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.
QUARTERLY FINANCIAL SUMMARY
(Stated in thousands of Canadian dollars, except per share amounts)
2010 (IFRS) 2011 (IFRS)
---------------------------------------------------------------------------
Quarters ended December 31 March 31 June 30 September 30
---------------------------------------------------------------------------
Revenue $ 435,537 $ 525,350 $ 345,325 $ 492,944
EBITDA(1) 144,518 186,411 92,566 186,248
Net earnings (loss): (250) 65,560 16,403 83,468
Per basic share - 0.24 0.06 0.30
Per diluted share - 0.23 0.06 0.29
Funds provided by
operations(1) 133,903 192,337 70,766 73,182
Cash provided by
operations 75,064 117,322 176,312 20,281
---------------------------------------------------------------------------
2009
(CGAAP)(2) 2010 (IFRS)
----------------------------------------------------------------------------
Quarters ended December 31 March 31 June 30 September 30
----------------------------------------------------------------------------
Revenue $ 286,067 $ 373,136 $ 261,828 $ 359,152
EBITDA(1) 92,615 117,658 60,125 112,607
Net earnings (loss): (24,885) 56,917 (69,418) 56,286
Per basic share (0.09) 0.21 (0.25) 0.20
Per diluted share (0.09) 0.20 (0.25) 0.20
Funds provided by
operations(1) 123,728 102,759 40,692 126,811
Cash provided by
operations 70,631 20,624 143,001 67,575
----------------------------------------------------------------------------
(1) See "ADDITIONAL GAAP MEASURES".
(2) Financial information prepared under Canadian Generally Accepted
Accounting Principles (CGAAP) applicable at that time.
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.
EBITDA
Management believes that in addition to net earnings, earnings
before finance charges, income taxes, depreciation, amortization
and foreign exchange ("EBITDA"), as derived from information
reported in the Consolidated Statements of Earnings, 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 charges affect results.
Operating Earnings
Management believes that in addition to net earnings, operating
earnings as reported in the Consolidated Statements of Earnings 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.
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRS)
Precision is reporting its financial results in accordance with
IFRS from January 1, 2011, the changeover date set by the Canadian
Accounting Standards Board (AcSB). IFRS compliant comparative
financial information for one year from the effective date is
required.
For the three and nine months ended September 30, 2010 Precision
has restated the operating results as if it had always prepared
financial results in accordance with IFRS. As a result of
componentization of capital assets and applying different
depreciation rates to the different components under IFRS,
partially offset by the write-down of certain assets to fair market
value, depreciation expense for the third quarter of 2010 has
increased by $7 million over the amount previously reported and for
the nine month period ended September 30, 2010 increased by $19
million. In addition, Precision has a cash settled share
appreciation rights plan which was previously recorded based on the
intrinsic value method whereas IFRS requires the use of an option
pricing model. The difference in method resulted in a slight
decrease to the stock based compensation expense reported in the
third quarter of 2010 of $10 thousand and $0.4 million for the nine
month period ended September 30, 2010. Together these adjustments
had a net tax impact of reducing the deferred tax expense in the
third quarter of 2010 by $2 million and $6 million for the nine
month period ended September 30, 2010.
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", "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 timing and
deployment of new build and upgraded drilling rigs; our view of
customers' long-term outlook on the viability and growth of
unconventional oil and natural gas resource development in North
America; that Precision is well-positioned to respond to changes in
the spending of its customers; Precision's potential to expand in
international markets; that demand for Precision's services in
Canada and the United States will continue the upward trend of the
last several quarters; interest in Precision's Super Series rigs
resulting in additional new build and upgrade rig contracts; that
Precision will be able to meet staffing challenges; that activity
levels and the financial performance of the Completion and
Production Services segment will improve throughout the year and
end the year meaningfully above 2010 performance; that Precision's
active rig count in the United Sates will increase modestly in the
coming months as new build and upgraded rigs enter the market; that
the active rig count during the winter drilling season will surpass
those levels achieved during last winter drilling season; the
expected Alberta provincial income tax reassessment; Precision's
level and timing of capital expenditures and anticipated uses of
capital; the anticipated cost of upgrading rigs and purchasing long
lead time items for future new build rigs or rig upgrades; the
number of rigs committed to term contracts in North America; that
customer demand will result in additional new build rig
opportunities; that dayrates will continue to improve for the
remainder of 2011; the potential for a further reduction in demand
for natural gas drilling; that a reduction in natural gas directed
drilling would be mostly offset by increases in oil and liquids
rich natural gas drilling; Precision's financial flexibility and
ability to capitalize on acquisitions and growth opportunities; and
Precision's continued compliance with its financial covenants and
ability to access its credit lines.
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; the effects of seasonal and weather
conditions on operations and facilities; the existence of
competitive operating risks inherent in contract drilling,
directional drilling, well servicing and ancillary oilfield
services; general economic, market or business conditions; changes
in laws or regulations; interpretation of tax filing position for
prior period transactions; the availability of qualified personnel,
management or other key inputs; the enforceability of term
contracts; 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 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.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
September 30, December 31,
(Stated in thousands of Canadian dollars) 2011 2010
----------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 501,145 $ 256,831
Accounts receivable 510,295 414,901
Income tax recoverable 55,925 -
Inventory 7,063 4,933
----------------------------------------------------------------------------
Total current assets 1,074,428 676,665
Non-current assets:
Income tax recoverable 64,579 64,579
Property, plant and equipment 2,842,333 2,532,398
Intangibles 7,415 6,366
Goodwill 362,769 284,532
----------------------------------------------------------------------------
Total non-current assets 3,277,096 2,887,875
----------------------------------------------------------------------------
Total assets $ 4,351,524 $ 3,564,540
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 346,135 $ 217,799
Income tax payable - 863
Long-term debt - -
----------------------------------------------------------------------------
Total current liabilities 346,135 218,662
Non-current liabilities:
Share based compensation 8,171 12,268
Provisions and other 17,586 18,051
Long-term debt 1,262,038 804,494
Deferred tax liabilities 613,781 578,239
----------------------------------------------------------------------------
Total non-current liabilities 1,901,576 1,413,052
Shareholders' equity:
Shareholders' capital 2,203,613 2,200,031
Contributed surplus 16,210 11,266
Deficit (66,820) (232,251)
Accumulated other comprehensive loss (49,190) (46,220)
----------------------------------------------------------------------------
Total shareholders' equity 2,103,813 1,932,826
----------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 4,351,524 $ 3,564,540
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three months ended Nine months ended
September 30, September 30,
(stated in thousands
of Canadian
dollars, except per
share amounts) 2011 2010 2011 2010
----------------------------------------------------------------------------
Revenue $ 492,944 $ 359,152 $ 1,363,619 $ 994,116
Expenses:
Operating 282,367 222,482 809,266 630,901
General and
administrative 24,329 24,063 89,128 72,825
----------------------------------------------------------------------------
Earnings before
finance charges,
foreign exchange,
income taxes and
depreciation and
amortization 186,248 112,607 465,225 290,390
Depreciation and
amortization 64,504 54,364 180,416 151,649
----------------------------------------------------------------------------
Operating earnings 121,744 58,243 284,809 138,741
Other items:
Foreign exchange (34,105) (18,003) (31,300) (11,670)
Finance charges 34,232 21,848 92,940 102,819
----------------------------------------------------------------------------
Earnings before tax 121,617 54,398 223,169 47,592
Income taxes:
Current 38,730 608 40,882 4,755
Deferred (581) (2,496) 16,856 (948)
----------------------------------------------------------------------------
38,149 (1,888) 57,738 3,807
----------------------------------------------------------------------------
Net earnings $ 83,468 $ 56,286 $ 165,431 $ 43,785
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share:
Basic $ 0.30 $ 0.20 $ 0.60 $ 0.16
Diluted $ 0.29 $ 0.20 $ 0.57 $ 0.15
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three months ended Nine months ended
September 30, September 30,
(Stated in thousands
of Canadian
dollars) 2011 2010 2011 2010
----------------------------------------------------------------------------
Net earnings $ 83,468 $ 56,286 $ 165,431 $ 43,785
Unrealized gain
(loss) on
translation of
assets and
liabilities of
operations
denominated in
foreign currency 96,717 (35,000) 59,865 (19,850)
Foreign exchange
loss on net
investment hedge
with U.S.
denominated debt,
net of tax of (80,034) - (62,835) -
----------------------------------------------------------------------------
Comprehensive income $ 100,151 $ 21,286 $ 162,461 $ 23,935
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Nine months ended September 30,
(Stated in thousands of Canadian
dollars) 2011 2010
----------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings $ 165,431 $ 43,785
Adjustments for:
Long-term compensation plans 15,156 6,381
Depreciation and amortization 180,416 151,649
Foreign exchange (31,696) (10,595)
Finance charges 92,940 102,819
Income taxes 57,738 3,807
Other (1,070) (1,604)
Income taxes paid (111,166) (5,589)
Income taxes recovered 400 30,367
Interest paid (32,646) (51,171)
Interest received 782 413
----------------------------------------------------------------------------
Funds provided by operations 336,285 270,262
Changes in non-cash working capital
balances (22,370) (39,062)
----------------------------------------------------------------------------
313,915 231,200
Investments:
Business acquisitions, net of cash
acquired (92,886) -
Purchase of property, plant and
equipment (398,370) (64,953)
Proceeds on sale of property, plant
and equipment 8,694 9,371
Changes in non-cash working capital
balances 10,637 7,785
----------------------------------------------------------------------------
(471,925) (47,797)
Financing:
Repayment of long-term debt (175,000) (103,760)
Premium paid on settlement of
unsecured senior notes (26,688) -
Debt issue costs (13,304) (2,165)
Debt facility amendment costs (1,134) (997)
Re-purchase of trust units of
dissenting unitholders - (6)
Increase in long-term debt 581,520 -
Issuance of common shares on the
exercise of options 2,100 -
Changes in non-cash working capital
balances (746) -
----------------------------------------------------------------------------
366,748 (106,928)
----------------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents 35,576 1,435
----------------------------------------------------------------------------
Increase in cash and cash equivalents 244,314 77,910
Cash and cash equivalents, beginning of
period 256,831 130,799
----------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 501,145 $ 208,709
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
Accumulated
other
(Stated in thousands of Shareholders' Contributed comprehensive
Canadian dollars) capital surplus loss
----------------------------------------------------------------------------
Balance at January 1, 2011 $ 2,200,031 $ 11,266 $ (46,220)
Net earnings for the period - - -
Other comprehensive loss
for the period - - (2,970)
Share options exercised 3,198 (1,098) -
Issued on redemption of non-
management directors DSUs 384 (384) -
Share based compensation
expense - 6,426 -
----------------------------------------------------------------------------
Balance at September 30,
2011 $ 2,203,613 $ 16,210 $ (49,190)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Stated in thousands of
Canadian dollars) Total
Deficit equity
----------------------------------------------------------------------------
Balance at January 1, 2011 $ (232,251) $ 1,932,826
Net earnings for the period 165,431 165,431
Other comprehensive income
for the period - (2,970)
Share options exercised - 2,100
Issued on redemption of non-
management directors DSUs - -
Share based compensation
expense - 6,426
----------------------------------------------------------------------------
Balance at September 30,
2011 $ (66,820) $ 2,103,813
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
Shareholders'/ other
(Stated in thousands of unitholders Contributed comprehensive
Canadian dollars) capital surplus loss
----------------------------------------------------------------------------
Balance at January 1, 2010 $ 2,198,738 $ - $ -
Net earnings for the period - - -
Other comprehensive loss for
the period - - (19,850)
Issued on redemption of non-
management directors DSUs 204 - -
Cancellation of units owned
by dissenting unitholders (9) 3 -
Reclassification of
exchangeable LP unit
liability on conversion to
a corporation 891 - -
Reclassification of share
option plan and non-
management directors DSU
liabilities on conversion
to a corporation - 7,271 -
Share based compensation
expense - 2,388 -
----------------------------------------------------------------------------
Balance at September 30,
2010 $ 2,199,824 $ 9,662 $ (19,850)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Stated in thousands of Total
Canadian dollars) Deficit equity
----------------------------------------------------------------------------
Balance at January 1, 2010 $ (275,786) $ 1,922,952
Net earnings for the period 43,785 43,785
Other comprehensive loss for
the period - (19,850)
Issued on redemption of non-
management directors DSUs - 204
Cancellation of units owned
by dissenting unitholders - (6)
Reclassification of
exchangeable LP unit
liability on conversion to
a corporation - 891
Reclassification of share
option plan and non-
management directors DSU
liabilities on conversion
to a corporation - 7,271
Share based compensation
expense - 2,388
----------------------------------------------------------------------------
Balance at September 30,
2010 $ (232,001) $ 1,957,635
----------------------------------------------------------------------------
----------------------------------------------------------------------------
THIRD QUARTER 2011 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
Friday, October 21, 2011.
The conference call dial in numbers are 1-877-440-9795 or
416-340-8527
A live webcast of the conference call will be accessible on
Precision's website at www.precisiondrilling.com 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
October 28, 2011 by dialing 1-800-408-3053 or 905-694-9451, pass
code 3411661.
About Precision
Precision is a leading provider of safe, High Performance, High
Value 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, directional drilling
services, 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.
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) Precision Drilling Corporation 800, 525 - 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1www.precisiondrilling.com
Grafico Azioni Precision Drilling (NYSE:PDS)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Precision Drilling (NYSE:PDS)
Storico
Da Lug 2023 a Lug 2024
