Precision Drilling Corporation announces results for the first
quarter - Energy Services generates 107% earnings growth CALGARY,
April 28 /PRNewswire-FirstCall/ -- Precision Drilling Corporation
("Precision" or the "Corporation") announced today that income from
continuing operations for the first quarter of 2005 was $138.5
million or $2.22 per diluted share, compared to $106.1 million or
$1.88 per diluted share for the first quarter of 2004. Revenue
increased by 20% to $792 million, with operating earnings
substantially surpassing this improvement, increasing 32% to $224
million. Year-over-year, Precision Drilling's three business
segments increased operating earnings by 107% in Energy Services,
43% in Rental and Production and 16% in Contract Drilling. These
improvements were the result of: - The successful integration of
the Compact(TM) wireline services and the internationally based
land drilling rigs acquisitions; - Increased service pricing in
response to continued strong demand; and - Enhanced equipment
utilization in Energy Services. It is important to note that this
improvement in year-over-year profitability occurred despite
decreased overall activity levels in Canada, demonstrating the
success of Precision's efforts to expand internationally, as well
as its pricing strength in the Canadian market. International
revenue in the first quarter of 2005 increased 51% over the same
period in 2004 due to our successful acquisition of 31
internationally- based land drilling rigs and geographic expansion
into high growth markets by our Energy Services segment.
Internationally, Energy Services generated higher earnings across
all product lines in nearly all of the regions in which the company
operates. Summary Results Three months ended March 31, 2005 2004 %
Change
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Revenue $ 791,876 $ 659,365 20.1 Operating earnings 224,241 169,631
32.2 Earnings from continuing operations 138,518 106,082 30.6 Net
earnings 138,518 100,519 37.8 Diluted earnings per share: From
continuing operations $ 2.22 $ 1.88 18.1 Net earnings $ 2.22 $ 1.79
24.0
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Funds provided by continuing operations $ 204,989 $ 178,186 15.0
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Contract Drilling Revenue in the Contract Drilling segment
increased by 11% to $443 million in the first quarter compared to
the same period in 2004. This revenue increase was primarily driven
by the acquisition of 31 internationally based land drilling rigs
in May 2004 as well as higher pricing levels in the Canadian
market. This revenue growth rate was partially reduced by lower
activity levels in Canada due to an early spring breakup, which
shortened the winter drilling season. Operating earnings of $171
million in the first quarter of 2005 increased 16% compared to the
same period in 2004. The strong growth in operating earnings was
driven by pricing improvements in Canada which was partially offset
by activity in the Eastern Hemisphere where current margins are
lower. However, recent contract awards in the Eastern Hemisphere
have been for substantially increased drilling rig day rates and
increased utilization is anticipated over the coming months. The
Canadian drilling rig fleet achieved 13,999 operating days, for an
overall utilization rate of 68% in the quarter, compared to 14,768
operating days and a 72% utilization rate in the first quarter of
2004. The service rig operation saw operating hours decrease by 7%
year-over-year from 150,693 in the first quarter of 2004 compared
to 139,674 in the first quarter of 2005. Energy Services Energy
Services generated revenue of $282 million in the first quarter of
2005, an increase of 35% or $74 million over the same period in
2004. Of this increase, $36 million related to the Compact(TM)
wireline services acquisition in May, 2004. Excluding the impact of
this acquisition, the remaining $38 million of growth was achieved
primarily in international operations with Canadian revenues
effectively flat year-over-year. In Canada, strong activity in the
first two months of the year was offset by the effects of an early
spring break up. Wireline Services revenue was $144 million in the
first quarter of 2005, an increase of $52 million over the same
period in 2004. Excluding the impact of the Compact(TM) wireline
services acquisition, revenues increased by $16 million or 18%. Of
this increase, $5 million was generated in Canada as a result of
increased cased- and open-hole activity in the first two months of
the year, partially offset by the effects of an early spring break
up. The remaining $11 million increase was driven by improved
International results based on increased activity in the United
States, Mexico, Latin America, Asia Pacific and the Middle East.
Drilling & Evaluation Services revenue increased 25% to $100
million in the first quarter of 2005 from $80 million in the first
quarter of 2004. During the quarter, revenues from international
operations grew by $28 million, driven by increased utilization of
Precision's LWD/HEL tools and rotary steerable systems, which
together provided $14 million of incremental revenue. Offsetting
these results were the effects of an early spring break up in 2005
combined with increased commoditization of the MWD tools in Canada.
Revenues from Production Services grew by 20% to $36 million in the
first three months of 2005 from $30 million in the first quarter of
2004, reflecting higher activity in Canada and the Middle East.
Operating earnings increased by $29 million or 107% to $56 million
for the first quarter of 2005, compared to $27 million in the same
period of 2004. This increase is attributable to the Compact(TM)
wireline services acquisition, combined with revenue growth across
all product lines and operating cost improvements. Cost
improvements as a percentage of revenue have occurred in the
segment's mature markets as a result of cost control initiatives,
and in its developing markets through the achievement of critical
mass. Increased depreciation, resulting from an increased tool
fleet, partially offset these gains. Rental and Production The
Rental and Production segment saw a 32% increase in revenue and a
43% increase in operating earnings in the first quarter of 2005
compared to the same period in 2004. These increases were driven
primarily by the industrial plant maintenance business and its
increased activity in the Alberta oil sands projects. Stock Split
As previously announced on March 10, 2005, Precision's Board of
Directors has approved a stock split of its Common Shares on a
two-for-one basis, pending shareholder approval. Certain statements
contained in this press release may contain words such as
"anticipate", "could", "should", "expect", "believe", "will" and
similar expressions and statements relating to matters that are not
historical facts. These statements 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 March 31, CDN $000's, except per share amounts
(unaudited) 2005 2004
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Revenue $ 791,876 $ 659,365 Expenses: Operating 449,089 386,188
General and administrative 51,912 41,783 Depreciation and
amortization 56,736 49,628 Research and engineering 11,323 11,810
Foreign exchange (1,425) 325
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567,635 489,734
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Operating earnings 224,241 169,631 Interest 11,748 8,188
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Earnings from continuing operations before income taxes 212,493
161,443 Income taxes: Current 70,489 35,541 Future 3,486 19,820
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73,975 55,361
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Earnings from continuing operations 138,518 106,082 Discontinued
operations, net of tax - (5,563)
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Net earnings 138,518 100,519 Retained earnings, beginning of period
1,041,683 794,279
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Retained earnings, end of period $1,180,201 $ 894,798
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Earnings per share from continuing operations: Basic $ 2.26 $ 1.91
Diluted $ 2.22 $ 1.88
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Earnings per share: Basic $ 2.26 $ 1.81 Diluted $ 2.22 $ 1.79
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Common shares outstanding (000's) 61,330 55,753 Weighted average
shares outstanding (000's) 61,157 55,485 Diluted shares outstanding
(000's) 62,438 56,309 CONSOLIDATED BALANCE SHEETS March 31,
December 31, CDN $ 000's 2005 2004
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(unaudited) Assets Current assets: Cash and cash equivalents $
177,563 $ 122,012 Accounts receivable 818,653 690,999 Inventory
120,201 114,352 Future income tax asset 9,266 8,711
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1,125,683 936,074 Property, plant and equipment, net of accumulated
depreciation 1,954,851 1,945,521 Intangibles, net of accumulated
amortization 188,550 191,665 Goodwill 734,979 735,413 Other assets
8,658 9,116 Future income tax asset 27,133 32,984
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$4,039,854 $3,850,773
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Liabilities and Shareholders' Equity Current liabilities: Accounts
payable and accrued liabilities $ 344,649 $ 340,372 Income taxes
payable 53,445 31,103 Current portion of long-term debt 18 18
Future income tax liability 4,933 7,270
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403,045 378,763 Long-term debt 717,095 718,870 Future income taxes
432,801 431,399 Shareholders' equity: Share capital 1,298,769
1,274,967 Contributed surplus 29,588 26,024 Cumulative translation
adjustment (21,645) (20,933) Retained earnings 1,180,201 1,041,683
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2,486,913 2,321,741
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$4,039,854 $3,850,773
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Common shares outstanding (000's) 61,330 60,790 Common share
purchase options outstanding (000's) 2,994 3,348 CONSOLIDATED
STATEMENTS OF CASH FLOW Three months ended March 31, CDN $000's,
(unaudited) 2005 2004
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Cash provided by (used in): Continuing operations: Earnings from
continuing operations $ 138,518 $ 106,082 Items not affecting cash:
Depreciation and amortization 56,736 49,628 Stock-based
compensation 4,875 2,051 Future income taxes 3,486 19,820
Amortization of deferred financing costs 459 320 Unrealized foreign
exchange loss on long-term monetary items 915 285
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Funds provided by continuing operations 204,989 178,186 Changes in
non-cash working capital balances (107,457) (110,258)
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97,532 67,928 Discontinued operations: Funds used in discontinued
operations - (1,588) Changes in non-cash working capital balances
of discontinued operations - 7,612
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- 6,024 Investments: Business acquisitions - (630) Purchase of
property, plant and equipment (72,960) (53,728) Purchase of
intangibles (20) - Proceeds on sale of property, plant and
equipment 8,512 4,713 Proceeds on disposal of discontinued
operations - 25,746
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(64,468) (23,899) Financing: Increase in long-term debt - 1,263
Repayment of long-term debt (4) (4,365) Issuance of common shares
on exercise of options 22,491 30,535 Change in bank indebtedness -
(78,647)
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22,487 (51,214)
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Increase (decrease) in cash and cash equivalents 55,551 (1,161)
Cash and cash equivalents, beginning of period 122,012 21,370
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Cash and cash equivalents, end of period $ 177,563 $ 20,209
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SEGMENT INFORMATION Three months ended March 31,2005 CDN $000's
Contract Energy Rental and Corporate (unaudited) Drilling Services
Production and Other Total
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Revenue $ 443,192 $ 281,725 $ 66,959 $ - $ 791,876 Operating
earnings 170,675 56,011 13,977 (16,422) 224,421 Research and
engineering - 11,323 - - 11,323 Depreciation and amortization
27,763 24,213 3,311 1,449 56,736 Total assets 1,999,672 1,682,192
194,736 163,254 4,039,854 Goodwill 350,507 355,770 28,702 - 734,979
Capital expenditures 19,694 35,935 10,764 6,587 72,980
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Three months ended March 31,2004(xx) CDN $000's Contract Energy
Rental and Corporate (unaudited) Drilling Services Production and
Other Total
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Revenue $ 400,468 $ 208,197 $ 50,700 $ - $ 659,365 Operating
earnings 147,719 27,117 9,741 (14,946) 169,631 Research and
engineering - 11,810 - - 11,810 Depreciation and amortization
24,487 20,428 3,302 1,411 49,628 Total assets 1,503,219 1,319,876
177,513 55,927 3,056,535 Goodwill 257,531 242,314 28,702 - 528,547
Capital expenditures(x) 17,201 25,723 6,465 4,339 53,728
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(x) excludes acquisitions (xx) certain comparative figures have
been reclassified to conform to the current financial statement
presentation CANADIAN DRILLING OPERATING STATISTICS For the three
months ended March 31, 2005 2004
----------------------------------------------------------- Market
Market Precision Industry(x) Share % Precision Industry(x) Share %
----------------------------------------------------------- Number
of drilling rigs 229 712 32.2 226 679 33.3 Number of operating days
(spud to release) 13,999 45,670 30.7 14,768 45,189 32.7 Wells
drilled 2,162 6,184 35.0 2,283 6,159 37.1 Average days per well 6.5
7.4 6.5 7.3 Metres drilled (000's) 2,566 7,357 34.9 2,571 7,087
36.3 Average metres per day 183 161 174 157 Average metres per well
1,187 1,190 1,126 1,151 Rig utilization rate (%) 67.9 71.3 71.9
73.2 (x) Excludes non-CAODC rigs. A conference call to review the
first quarter 2005 results has been scheduled for 12:00 noon MST on
Thursday, April 28, 2005. The conference call dial-in number is
1-800-814-4859. A live webcast will be accessible at
http://www.precisiondrilling.com/. Precision Drilling Corporation
(TSX: PD and PD.U; NYSE: PDS) is a global oilfield services company
providing a broad range of drilling, production and evaluation
services with focus on fulfilling customer needs through
fit-for-purpose technologies for the maturing oilfields of the 21st
century. With corporate offices in Calgary, Alberta, Canada,
corporate subsidiary offices in Houston, Texas, and research
facilities in the U.S. and Europe, Precision employs more than
12,000 people conducting operations in more than 30 countries.
Precision is committed to providing efficient and safe services to
create value for our customers, our shareholders and our employees.
DATASOURCE: Precision Drilling Corporation CONTACT: Dale E.
Tremblay, Senior Vice President Finance and Chief Financial
Officer, Telephone: (403) 716-4500, Fax: (403) 264-0251; website:
http://www.precisiondrilling.com/; Archived images on this
organization are searchable through CNW Photo Archive website at
http://photos.newswire.ca/. Images are free to accredited members
of the media. To request a free copy of this organization's annual
report, please go to http://www.newswire.ca/ and click on
reports@cnw.
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