Precision Drilling loses $30M in Q2, but optimistic for rest of 2015

Precision Drilling says idle rigs may be activated later this year

International drilling company Precision Drilling Corp. (TSX:PD) reported a better-than-expected result for its latest quarter on Thursday as it lost $29.8 million.

Photo: Lukas Jankowski/Precision Driling.

The loss by the oilfield services company amounted to 10 cents per diluted share in its second quarter compared with a loss of $7.2 million or two cents per diluted share in the same quarter last year.

Analysts had expected the company to report a loss of 18 cents per share, according to Thomson Reuters.

Revenue was also better than expected even though it slipped to $334.5 million, down from $475.2 million a year ago.

Analysts had expected revenue of $319.7 million.

Precision Drilling chief executive Kevin Neveu said the first half of the year has seen a substantial reduction in demand for the company’s services due to low commodity prices and smaller drilling budgets.

“The first half of 2015 has been characterized by substantially reduced demand for our services as our customers grapple with depressed commodity prices and sharply reduced drilling budgets,” Neveu said in a release. “[Y]et we see signs of our market share improving and an emerging shift by customers from managing drilling programs based on contract portfolios to the traditional performance and value based decision factors.”

Precision Drilling’s capital plan for 2015 has been revised upward by $40 million to $546 million.

Of the 18 new-build drilling rigs scheduled for delivery in 2015 (13 rigs in the U.S., four in Canada and one internationally) 10 were delivered in Q1, six were delivered in Q2, one was delivered early in Q3 and the final rig is scheduled for delivery in Q4.

After delivery of the remaining contracted new-build rig in 2015, the Precision Drilling rig fleet will consist of 331 drilling rigs, including 236 Tier 1 rigs, 73 Tier 2 rigs and 22 PSST rigs. For the Tier 1 rigs, 124 will be in Canada, 106 in the U.S. and six internationally.

“Through this challenging market environment, we will continue to invest in our people, particularly in training and safety for our Precision crews at our Houston and Nisku Tech Centres, while we leverage our scale to lower operating costs and to create value for our customers and shareholders,” said Neveu.

Neveu says discussions with customers to reactivate idle Tier 1 rigs later this year are signs that customers’ focus is shifting to “high performance, high value services” provided by Precision Drilling.

In the international market, the company has successfully deployed a third rig to Kuwait, bringing total deployments for the last twelve months to five rigs: three to Kuwait, one to Saudi Arabia and one to the country of Georgia.

“International activity is generally less volatile than North America, and although there are near-term headwinds, we remain focused on expanding this segment of our business over the long term,” said Neveu.

With files from the Canadian Press.