Precision Drilling Corporation announces 105% increase in annual
earnings CALGARY, Feb. 12 /PRNewswire-FirstCall/ -- Precision
Drilling Corporation ("Precision" or the "Corporation") today
reports results for the year and quarter ended December 31, 2003.
Diluted earnings per share for the year increased 105% to $3.41
compared to $1.66 in 2002. Reflecting the strong activity levels in
the Canadian market, fourth quarter diluted earnings per share from
continuing operations increased to $1.17 compared to $0.12 last
year. Included in earnings from continuing operations for the
fourth quarter of 2003 are $3.9 million ($0.05 per share) of
charges associated with the write down of operating assets in the
Technology Services segment. Losses from discontinued operations
amounted to $0.18 per share in the fourth quarter of 2003 bringing
net earnings for the period to $0.99 per share. The review of the
business plan for the Technology Services segment was completed in
the fourth quarter of 2003. One ofthe outcomes of this process was
the identification of two product lines, namely pressure pumping
and completion services carried on by the Fleet Cementers and Polar
Completions divisions respectively, as being not core to the
segment's ongoing growth initiatives. As a result, a program has
been initiated to dispose of these businesses and discussions are
being held with interested parties. Results of operations for these
businesses along with those of Energy Industries, which was sold
effective January 1, 2003, have been classified as results from
discontinued operations. The Canadian market has been the
significant driver for Precision's improved results. Sustained high
natural gas and crude oil prices combined with favorable weather
conditions in Canada have generated a strong business environment.
Commodity prices were also relatively high in 2002, however,
concern over their sustainment at these high levels have led
customers to use a significant portion of their cash flow to
strengthen their balance sheets. Contract Drilling revenue of
$290.9 million and operating earnings of $99.2 million increased by
54% and 152% respectively in the fourth quarter of 2003 compared to
the same period of 2002. The Canadian drilling and service rig
operations saw activity levels increase 46% and 19% respectively.
The Canadian drilling fleet achieved 11,631 operating days in the
fourth quarter of 2003 and the service rig fleet generated 113,134
operating hours. The heightened activity levels brought increased
pricing as drilling revenue per operating day increased by 16% and
service revenue per hour increased by 11%. Precision's
international rig fleet grew to 19 at the end of 2003 compared to
16 at the end of 2002. International rig operating days increased
by 56% to 1,247 in the fourth quarter of 2003 compared to 2002.
Over half of the activity increase came from Mexico where the fleet
now numbers 10 rigs with the addition of 3 rigs as part of the
Burgos project extension. Activity in Venezuela has also improved
with 4 rigs being fully utilized throughout the fourth quarter of
2003. Additional operating days generated by contracts in Asia
Pacific and the Middle East rounded out the activity increase. The
positive impact of activity increases onthe profitability of the
international drilling operation was offset somewhat by the
devaluation of the US dollar versus the Canadian dollar. Technology
Services revenue increased by $52.3 million or 38% to $189.3
million in the fourth quarter of 2003compared to 2002. Operating
earnings, which included a $3.9 million write down of operating
assets, increased by $21.5 million over the same period. Revenue
increased in all regions but two while operating earnings increased
in all regions except one.Over half of the segment's revenue
increase was generated in Canada where operating activity increased
in conjunction with the rise in active drilling rigs which, in turn
resulted in pricing improvement for our services. Similarly, US
activity rose as the active land rig count increased from 856 in
December 2002 to 1,114 in December 2003. The US also experienced
rate increases, which combined with renewed focus on cost control,
generated significant improvement in profitability. The segment's
Mexicanoperations benefited from the extension of the Burgos
project and also from additional contract awards in that country.
Business in Latin America improved with the pick up of activity in
Venezuela. The Rental and Production segment saw a 12% increase in
revenue and a 86% increase in operating earnings in the fourth
quarter of 2003 compared to 2002. Much of the improvement came from
the rental operation which had 225,000 equipment rental days
compared to 157,000 in 2002, reflecting the strong activity levels
in the Canadian market. The plant maintenance business had strong
results from its Canadian industrial group, which saw a 17% year
over year increase in fourth quarter revenue, and from its
mechanical group which continues to experience growth in services
provided to the oilsands projects. Certain statements contained in
this press release, including statements which may contain words
such as "could", "should", "expect", "believe", "will" and similar
expressions and statements relating to matters that are not
historical facts are forward-looking statements. Such
forward-looking statements involve known and unknown risks and
uncertainties which may cause the actual results, performances 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, to which Precision is subject and other factors,
which are described in further detail in Precision's filings with
the Securities and Exchange Commission. CONSOLIDATED STATEMENTS OF
EARNINGS AND RETAINED EARNINGS Three Months Ended Years Ended CDN
$000's, except December 31 December 31 per share amounts 2003 2002
2003 2002
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(Unaudited) (Unaudited) Revenue $ 528,697 $ 369,649 $ 1,917,933 $
1,567,506 Expenses: Operating 341,034 273,882 1,273,434 1,094,846
General and administrative 35,585 35,622 136,747 144,466
Depreciation and amortization45,011 35,048 170,788 133,384 Research
and engineering 11,465 9,584 42,419 34,862 Foreign exchange (905)
699 (2,565) 4,389
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432,190 354,835 1,620,823 1,411,947
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Operating earnings 96,507 14,814 297,110 155,559 Interest 8,298
9,045 35,050 35,123 Dividend income - - - (39) Loss (gain) on
disposal of investments (329) 100 (3,355) (900)
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Earnings from continuing operations before income taxes and
non-controlling interest 88,538 5,669 265,415 121,375 Income taxes:
Current 20,546 3,564 59,681 64,762 Future 2,093 (4,849) 12,851
(34,072)
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22,639 (1,285) 72,532 30,690
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Earnings from continuing operations before non-controlling interest
65,899 6,954 192,883 90,685 Non-controlling interest 912 93 1,752
1,151
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Earnings from continuing operations 64,987 6,861 191,131 89,534
Gain on disposal of discontinued operations - - 17,460 -
Discontinued operations (9,842) 2,002 (19,915) 1,731
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Net earnings 55,145 8,863 188,676 91,265 Retained earnings,
beginning of period 753,615 611,221 620,084 528,819
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Retained earnings, end of period $ 808,760 $ 620,084 $ 808,760 $
620,084
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Earnings per share from continuing operations: Basic $ 1.19 $ 0.13
$ 3.51 $ 1.67 Diluted $ 1.17 $ 0.12 $ 3.46 $ 1.63
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Earnings per share: Basic $ 1.01 $ 0.16 $ 3.47 $ 1.70 Diluted $
0.99 $ 0.16 $ 3.41 $ 1.66
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Common shares outstanding (000's) 54,846 54,067 54,846 54,067
Weighted average shares outstanding (000's) 54,769 54,006 54,430
53,702 Diluted shares outstanding (000's) 55,578 55,121 55,299
54,815 CONSOLIDATED BALANCE SHEETS December 31 December 31 CDN $
000's 2003 2002
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Assets Current assets: Cash $ 21,370 $ 17,315 Accounts receivable
544,850 431,331 Income taxes recoverable - 8,712 Inventory 99,088
92,744 Assets of discontinued operations 21,150 51,725
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686,458 601,827 Property, plant and equipment, net of accumulated
depreciation 1,588,250 1,457,273 Intangibles, net of accumulated
amortization 65,262 71,355 Goodwill527,443 527,443 Other assets
8,932 17,443 Assets of discontinued operations 32,040 84,674
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$ 2,908,385 $ 2,760,015
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Liabilities and Shareholders' Equity Current liabilities: Bank
indebtedness $ 147,909 $ 95,321 Accounts payable and accrued
liabilities 260,545 257,913 Income taxes payable 7,373 - Current
portion of long-term debt 17,158 27,098 Liabilities of discontinued
operations 5,212 11,239
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438,197 391,571 Long-term debt 399,422 514,878 Future income taxes
320,599 311,164 Future income taxes of discontinued operations
1,107 7,383 Non-controlling interest 3,771 2,019 Shareholders'
equity: Share capital 936,529 912,916 Retained earnings 808,760
620,084
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1,745,289 1,533,000
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$ 2,908,385 $ 2,760,015
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CONSOLIDATED STATEMENTS OF CASH FLOW Three Months Ended Years Ended
December 31 December 31
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CDN $000's 2003 2002 2003 2002 (Unaudited) (Unaudited) Cash
provided by (used in): Operations: Earnings from continuing
operations $ 64,987 $ 6,861 $ 191,131 $ 89,534 Items not affecting
cash: Depreciation and amortization 45,011 35,048 170,788 133,384
Future income taxes 2,093 (4,849) 12,851 (34,072) Loss (gain) on
disposal of investments (329) 100 (3,355) (900) Amortization of
deferred financing costs 321 323 1,286 1,294 Unrealized foreign
exchange gain on long-term monetary items (2,308) (2,481) (16,433)
(2,039) Non-controlling interest 912 93 1,752 1,151
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Funds provided by operations 110,687 35,095 358,020 188,352 Changes
in non-cash working capital balances (13,939) (11,505) (101,146)
(601)
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96,748 23,590 256,874 187,751 Discontinued operations: Funds
provided by (used in) discontinued operations $ (2,034) $ 4,527 $
(5,692) $ 6,868 Changes in non-cash working capital balances of
discontinued operations 4,294 (399) 7,245 4,604
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2,260 4,128 1,553 11,472 Investments: Business acquisitions, net of
cash required - (1,544) (6,800) (4,594) Purchase of property, plant
and equipment (77,489) (101,431) (314,921) (267,794) Purchase of
intangibles - (2,049) (6) (4,198) Proceeds on sale of property,
plant and equipment 7,777 6,761 24,423 32,449 Proceeds on disposal
of investments 386 - 10,966 1,872 Investments (350) (5,525) (1,080)
(5,672) Proceeds on disposal of discontinued operations - - 67,274
-
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(69,676) (103,788) (220,144) (247,937) Financing: Increase in
long-term debt 4,288 84,754 85,228 119,380 Repayment of long-term
debt - (9,836) (145,657) (102,275) Issuance of common shares 7,349
3,905 23,613 25,756 Change in bank indebtedness (37,869) (9,554)
2,588 9,937
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(26,232) 69,269 (34,228) 52,798 Increase (decrease) in cash 3,100
(6,801) 4,055 4,084 Cash, beginning of period 18,270 24,116 17,315
13,231
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Cash, end of period $ 21,370 $ 17,315 $ 21,370 $ 17,315
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SEGMENT INFORMATION Three months ended December 31, 2003 CDN $000's
Contract Technology Rental and Corporate (unaudited) Drilling
Services Production and Other Total
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Revenue $ 290,940 $ 189,345 $ 48,412 $ - $ 528,697 Operating
earnings 99,161 (617) 7,493 (9,530) 96,507 Research and engineering
- 11,465 - - 11,465 Depreciation and amortization 19,491 20,966
3,169 1,385 45,011 Total assets 1,423,036 1,257,235 166,300 61,814
2,908,385 Goodwill 257,531 241,340 28,572 - 527,443 Capital
expenditures(x) 36,240 28,939 5,695 6,615 77,489
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Three months ended December 31,2002 CDN $000's Contract Technology
Rental and Corporate (unaudited) Drilling Services Production and
Other Total
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Revenue $ 189,010 $ 137,075 $ 43,392 $ 172 $ 369,649 Operating
earnings 39,365 (22,149) 4,035 (6,437) 14,814 Research and
engineering - 9,584 - - 9,584 Depreciation and amortization 16,097
14,600 3,227 1,124 35,048 Total assets 1,312,459 1,127,550 240,842
79,164 2,760,015 Goodwill 257,531 241,340 28,572 - 527,443 Capital
expenditures(x) 21,152 67,763 7,399 7,166 103,480
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Twelve months ended December 31, 2003 Contract Technology Rental
and Corporate CDN $000's Drilling Services Production and Other
Total
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Revenue $ 992,824 $ 714,385 $ 210,724 $ - $1,917,933 Operating
earnings 285,753 4,842 39,350 (32,835) 297,110 Research and
engineering - 42,419 - - 42,419 Depreciation and amortization
77,725 75,578 12,533 4,952 170,788 Total assets 1,423,036 1,257,235
166,300 61,814 2,908,385 Goodwill 257,531 241,340 28,572 - 527,443
Capital expenditures(x) 99,034 177,756 15,158 22,979 314,927
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Twelve months ended December 31, 2002 Contract Technology Rental
and Corporate CDN $000's Drilling Services Production and Other
Total
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Revenue $ 770,147 $ 603,088 $ 192,840 $ 1,431 $1,567,506 Operating
earnings 184,553 (31,733) 30,090 (27,351) 155,559 Research and
engineering - 34,862 - - 34,862 Depreciation and amortization
62,524 53,347 13,159 4,354 133,384 Total assets 1,312,459 1,127,550
240,842 79,164 2,760,015 Goodwill 257,531 241,340 28,572 - 527,443
Capital expenditures(x) 50,686 189,092 22,346 9,868 271,992
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(x) excludes business acquisitions CANADIAN DRILLING OPERATING
STATISTICS For the Years Ended December 31, 2003 2002
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Industry MarketIndustry Market Precision (x) Share % Precision (x)
Share % -----------------------------------------------------------
Number of drilling rigs 225 660 34.1 226 644 35.1 Number of
operating days (spud to release) 42,725 126,457 33.8 31,363 91,958
34.1 Wells drilled 8,451 20,694 40.8 6,315 14,920 42.3 Average days
per well 5.1 6.1 5.0 6.2 Metres drilled (000's) 8,604 21,802 39.5
6,222 15,708 39.6 Average meters per day 201 172 198 171 Average
meters per well 1,018 1,054 985 1,053 Rig utilization rate (%) 52.0
53.1 38.3 39.1 (x) Excludes non-CAODC rigs. A conference call to
review the year-end results has been scheduled for 12:00 noon MST
on Thursday, February 12, 2004. The conference call dial-in number
is 1-800-814-4853. 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 and
Houston, Texas, and research facilities in the U.S. and Europe,
Precision employs more than 10,000 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, 4200, 150 6th Avenue S.W.,
Calgary, Alberta, T2P 3Y7, Telephone: (403) 716-4500,Fax: (403)
264-0251; website: http://www.precisiondrilling.com/.; To request a
free copy of this organization's annual report, please go to
http://www.newswire.ca/ and click on reports@cnw.
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