Precision Drilling Corporation announces record quarterly earnings
CALGARY, April 29 /PRNewswire-FirstCall/ -- Precision Drilling
Corporation ("Precision" or the "Corporation") today announces
record results for the quarter ended March 31, 2004. Diluted
earnings per share from continuing operations were $1.91 compared
to $1.34 for the first quarter of 2003, a 43% increase. Diluted net
earnings per share of $1.79 for the quarter ended March 31, 2004
includes a reduction of $0.12 per share stemming from discontinued
operations. In the first quarter of 2003, discontinued operations
added $0.17 to diluted net earnings per share. Also, effective
January 1, 2004, Precision has expensed the cost of share purchase
options granted to employees and directors and has restated the
2003 comparative amounts to give effect to this accounting
treatment. The impact was to reduce diluted net earnings per share
in the first quarter of 2004 and 2003 by $0.04 and $0.03,
respectively. With respect to discontinued operations, an
additional loss of $0.9 million was realized on the completion of
the sale of the Fleet Cementers division. An agreement for the sale
of substantially all of the assets of the Polar Completions
division was entered into and the carrying value of these assets
has been written down by $6.1 million to reflect the agreed sales
price. This transaction is expected to close on or about May 7,
2004. Contract Drilling saw a 42% increase in operating earnings
from $104.5 million in 2003 to $148.6 million in 2004. Canadian
operations accounted for 89% of this increase with improved pricing
providing the impetus for the stronger results. Drilling rig
operating days increased by less than 1% year over year, however,
average drilling revenue per day increased by 12%. Service rig
operating hours and revenue per hour both increased by 8% in the
first quarter of 2004 compared to the first quarter of 2003.
Operating earnings generated by international drilling operations
increased by 64% in line with the 58% increase in operating days.
Operating days increased in Mexico with the addition of 3 rigs to
the Burgos project, in Venezuela as activity in that country picked
up after working through the impact of the national strike in 2003,
and in the Middle East where the Corporation began drilling
operations in the fourth quarter of 2003. Technology Services
realized a 127% increase in operating earnings to $29.8 million in
the first quarter of 2004 compared to $13.1 million in the same
period of 2003. Revenue increased by $24.2 million or 12% over the
same periods. Over half of the increase in operating earnings was
generated by Canadian operations which saw an improvement in both
activity levels and pricing. Significant improvements were also
shown in the segment's US operations primarily as a result of cost
savings generated by restructuring initiatives. Mexico operations
saw increased operating earnings as a result of additional activity
on the Burgos project and South America benefited from the improved
situation in Venezuela. These improvements were offset somewhat by
additional research and engineering spending, much of which was
focused on rotary steerable development. Rental and Production
revenue remained relatively consistent at $50.7 million in 2004
compared to $49.6 million in 2003. Operating earnings improved in
both the equipment rental and industrial plant maintenance
businesses. Precision reduced its total borrowings by $80.8 million
during the quarter from $564.5 million at December 31, 2003 to
$483.7 million at March 31, 2004. This is the result of cash
inflows from operations, sale of discontinued operations and the
exercise of stock options being in excess of capital spending.
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 March 31, CDN $000's, except per share amounts
(unaudited) 2004 2003
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(restated) Revenue $ 665,165 $ 587,970 Expenses: Operating 387,862
376,037 General and administrative 42,807 35,224 Depreciation and
amortization 49,725 48,858 Research and engineering 11,263 8,899
Foreign exchange 312 101
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491,969 469,119
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Operating earnings 173,196 118,851 Interest 8,188 9,269
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Earnings from continuing operations before income taxes and
non-controlling interest 165,008 109,582 Income taxes: Current
36,893 22,568 Future 19,820 12,582
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56,713 35,150
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Earnings from continuing operations before non-controlling interest
108,295 74,432 Non-controlling interest 857 286
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Earnings from continuing operations 107,438 74,146 Discontinued
operations, net of tax (6,919) 8,983
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Net earnings 100,519 83,129 Retained earnings, beginning of period
794,279 613,805
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Retained earnings, end of period $ 894,798 $ 696,934
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Earnings per share from continuing operations: Basic $ 1.94 $ 1.37
Diluted $ 1.91 $ 1.34
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Earnings per share: Basic $ 1.81 $ 1.53 Diluted $ 1.79 $ 1.51
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Common shares outstanding (000's) 55,753 54,266 Weighted average
shares outstanding (000's) 55,485 54,161 Diluted shares outstanding
(000's) 56,309 55,149 CONSOLIDATED BALANCE SHEETS March 31,
December 31, CDN $ 000's 2004 2003
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(unaudited) (restated) Assets Current assets: Cash $ 20,209 $
21,370 Accounts receivable 699,391 544,850 Inventory 95,676 99,088
Assets of discontinued operations 12,312 21,150
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827,588 686,458 Property, plant and equipment, net of accumulated
depreciation 1,587,732 1,588,250 Intangibles, net of accumulated
amortization 63,778 65,262 Goodwill 528,547 527,443 Other assets
8,612 8,932 Assets of discontinued operations 4,086 32,040
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$ 3,020,343 $ 2,908,385
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Liabilities and Shareholders' Equity Current liabilities: Bank
indebtedness $ 79,077 $ 147,909 Accounts payable and accrued
liabilities 292,631 260,545 Income taxes payable 15,177 7,373
Current portion of long-term debt 13,418 17,158 Liabilities of
discontinued operations 5,490 5,212
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405,793 438,197 Long-term debt 391,172 399,422 Future income taxes
340,356 320,599 Future income taxes of discontinued operations -
1,107 Non-controlling interest 4,628 3,771 Shareholders' equity:
Contributed surplus 15,766 14,266 Share capital 967,830 936,744
Retained earnings 894,798 794,279
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1,878,394 1,745,289
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$ 3,020,343 $ 2,908,385
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Common shares outstanding (000's) 55,753 54,846 Common share
purchase options outstanding (000's) 2,547 3,393 CONSOLIDATED
STATEMENTS OF CASH FLOW Three months ended March 31, CDN $000's
(unaudited) 2004 2003
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(restated) Cash provided by (used in): Continuing operations:
Earnings from continuing operations $ 107,438 $ 74,146 Items not
affecting cash: Stock-based compensation 2,051 1,672 Depreciation
and amortization 49,725 48,858 Future income taxes 19,820 12,582
Non-controlling interest 857 286 Amortization of deferred financing
costs 320 322 Unrealized foreign exchange loss (gain) on long-term
monetary items 285 (5,464)
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Funds provided by continuing operations 180,496 132,402 Changes in
non-cash working capital balances (111,238) (149,713)
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69,258 (17,311) Discontinued operations: Funds provided by (used
in) discontinued operations (3,898) (2,230) Changes in non-cash
working capital balances of discontinued operations 8,592 (271)
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4,694 (2,501) Investments: Business acquisitions (630) (6,800)
Purchase of property, plant and equipment (53,728) (76,732)
Proceeds on sale of property, plant and equipment 4,713 4,237
Proceeds on disposal of discontinued operations 25,746 60,360
Investments - (759)
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(23,899) (19,694) Financing: Increase in long-term debt 1,263
44,960 Repayment of long-term debt (4,365) (5,440) Issuance of
common shares on exercise of options 30,535 6,209 Change in bank
indebtedness (78,647) 3,159
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(51,214) 48,888
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Increase (decrease) in cash (1,161) 9,382 Cash, beginning of period
21,370 17,315
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Cash, end of period $ 20,209 $ 26,697
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SEGMENT INFORMATION Three months ended March 31, 2004 CDN $000's
Contract Technology Rental and Corporate (unaudited) Drilling
Services Production and Other Total
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Revenue $ 387,251 $ 227,214 $ 50,700 $ - $ 665,165 Operating
earnings 148,608 29,793 9,741 (14,946) 173,196 Research and
engineering - 11,263 - - 11,263 Depreciation and amortization
24,357 20,655 3,302 1,411 49,725 Total assets 1,502,344 1,283,193
178,946 55,860 3,020,343 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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Three months ended March 31, 2003 CDN $000's Contract Technology
Rental and Corporate (unaudited) Drilling Services Production and
Other Total
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Revenue $ 335,312 $ 203,037 $ 49,621 $ - $ 587,970 Operating
earnings 104,525 13,098 8,271 (7,043) 118,851 Research and
engineering - 8,899 - - 8,899 Depreciation and amortization 25,613
18,753 3,319 1,173 48,858 Total assets 1,421,031 1,238,468 179,365
81,254 2,920,118 Goodwill 257,531 241,340 28,572 - 527,443 Capital
expenditures(x) 8,298 60,028 3,849 4,557 76,732
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(x)excludes acquisitions CANADIAN DRILLING OPERATING STATISTICS For
the three months ended March 31, 2004 2003
---------------------------------------------------- Market Market
Pre- Share Pre- Share cision Industry(x) % cision Industry(x) %
---------------------------------------------------- Number of
drilling rigs 226 679 33.3 225 648 34.7 Number of operating days
(spud to release) 14,768 45,189 32.7 14,641 42,024 34.8 Wells
drilled 2,283 6,159 37.1 2,281 5,383 42.4 Average days per well 6.5
7.3 6.4 7.8 Metres drilled (000's) 2,571 7,087 36.3 2,391 5,950
40.2 Average metres per day 174 157 163 142 Average metres per well
1,126 1,151 1,048 1,105 Rig utilization rate (%) 71.9 73.2 72.3
72.1 (x) Excludes non-CAODC rigs. A conference call to review the
first quarter 2004 results has been scheduled for 12:00 noon MST on
Thursday, April 29, 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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