This news release contains "forward-looking
information and statements" within the meaning of applicable
securities laws. For important information with respect to such
forward-looking information and statements and the further
assumptions and risks to which they are subject, see the
"Cautionary Statement Regarding Forward-Looking Information and
Statements" later in this news release.
Precision Drilling Corporation (“Precision” or “the Company”)
(TSX:PD; NYSE:PDS) today announced that the waiting period under
the Competition Act (Canada) expired on November 16, 2018 in
relation to the combination with Trinidad Drilling Ltd.
(“Trinidad”) (TSX:TDG). At Precision’s election, the expiration of
the waiting period now satisfies the required Competition Act
condition under the arrangement agreement between Precision and
Trinidad.
Precision’s President and CEO Kevin Neveu
stated: “Successful termination of the waiting periods for both
Canadian and U.S. competition acts marks a significant milestone in
the regulatory review process for the Precision-Trinidad
combination. We remain committed to the Trinidad Board supported
acquisition of Trinidad and have had a positive response from both
Precision and Trinidad shareholders to our proposed combination.
The Precision and Trinidad teams are excited about the potential
value the combined company will create for shareholders going
forward.”
“We understand the timing of the Ensign cash bid
for Trinidad has been opportunistically accelerated as markets have
experienced recent volatility. The Trinidad Board stands by its
recommendation to shareholders to reject the inadequate Ensign cash
offer and support the Precision-Trinidad combination in order to
realize the benefit of the transaction synergies and participate in
the long-term upside in the combined company.”
“We are firm on our offer and will not increase
our bid despite recent market volatility. We stand behind the
agreed pro forma ownership split of 29% of Precision shares to the
Trinidad shareholders and believe the Precision-Trinidad
combination represents a significant value creation opportunity for
Trinidad shareholders as outlined in our joint circular,” concluded
Mr. Neveu.
As disclosed in our joint circular, the benefits
of a combination with Precision are significant and include:
- Long-term value creation opportunity through continued equity
ownership
- Sizeable and immediate cost synergies ($52 million
annualized)
- Significant cash flow generation potential
- Creates a unique industry-leading, high-performance land
driller
- Third-largest U.S. land driller
- Expanded international growth opportunities
- Leader in land drilling technology with future growth
opportunities
- Shared values create strong strategic fit
- Increased size and trading liquidity
- Strong balance sheet and credit profile
Operational Update
In the U.S., Precision has 82 active rigs, up
two rigs from the date of our Q3/18 conference call as demand for
the most technically capable and operationally efficient rigs
remains strong. The Company has signed seven additional term
contracts since that time with several other contracts pending and
expected to be signed in the coming weeks.
In Canada, Precision’s activity has remained
largely stable since our Q3/18 conference call with 54 rigs
currently active. Quarter-to-date activity has tracked in line with
Q4/17 despite recent market uncertainty.
Precision’s international operations remain
stable with eight rigs currently active and an additional Kuwait
new build rig deployment on track for mid-2019.
Voting Your Proxy
Your vote is important. Precision encourages
shareholders to read the meeting materials in detail. Proxy or
voting instructions from Precision shareholders must be received by
no later than 10:30 a.m. (Calgary time) on December 7,
2018.
If you have any questions or require more
information to vote your Precision shares, please contact Evolution
Proxy, Inc. proxy solicitation agent for Precision at
1-844-226-3222 or 1-416-855-0238 outside of North America, or via
email at info@evolutionproxy.com.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements contained in this news
release, including statements that contain words such as “could”,
“should”, “can”, “anticipate”, “estimate”, “intend”, “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:
- expected cost synergies arising from the combination;
- timing to realize expected synergies;
- expectations regarding the entering into of contracts with
respect to U.S. operations and the timing thereof;
- the number of rigs under contract in Q1/19;
- expectations regarding activity levels in Canada for the
remainder of 2018;
- the deployment of the Kuwait new build rig and the timing
thereof;
- the anticipated benefits of the combination transaction;
- expectation that the combination transaction will create
near-term and long-term value for shareholders of Precision and
Trinidad achieved through the share exchange structure;
- expected free cash flow generation potential of the combination
transaction;
- expectations regarding Trinidad's and Precision's ability to
carry out expansion and growth plans;
- the increased size and trading liquidity of the securities of
Precision following the completion of the combination
(“Post-Arrangement Precision”); and
- the expectation that the combination transaction will improve
Post-Arrangement Precision’s balance sheet and credit profile.
These forward-looking information and statements
are based on certain assumptions and analysis made by Precision in
light of our experience and our perception of historical trends,
current conditions, expected future developments and other factors
we believe are appropriate under the circumstances. These include,
among other things:
- the timely receipt of required regulatory and Court
approvals;
- the satisfaction of other closing conditions in all material
respects and on a timely basis in accordance with the terms of the
arrangement agreement between Precision and Trinidad;
- Precision's anticipated financial performance;
- the success of Trinidad's and Precision's operations;
- the successful negotiation of contracts with respect to U.S.
operations;
- prevailing commodity prices and exchange rates;
- future operating costs of Trinidad's and Precision's
assets;
- the market for Post-Arrangement Precision’s rigs;
- prevailing regulatory, tax and environmental laws and
regulations;
- stock market volatility and market valuations;
- that there will be no significant events occurring outside of
the normal course of business of Trinidad or Precision, as
applicable;
- the fluctuation in oil prices may pressure customers into
reducing or limiting their drilling budgets;
- the status of current negotiations with our customers and
vendors;
- customer focus on safety performance;
- existing term contracts are neither renewed nor terminated
prematurely;
- our ability to deliver rigs to customers on a timely basis;
and
- the general stability of the economic and political
environments in the jurisdictions where we operate.
Undue reliance should not be placed on
forward-looking information and statements. Whether actual results,
performance or achievements will conform to our expectations and
predictions is subject to a number of known and unknown risks and
uncertainties which could cause actual results to differ materially
from our expectations. Such risks and uncertainties include, but
are not limited to:
- failure to complete the transaction in all material respects in
accordance with the arrangement agreement between Precision and
Trinidad or at all;
- unforeseen delays in completing this transaction;
- unforeseen difficulties or delays in integrating the assets of
Trinidad into Precision's operations;
- volatility in the price and demand for oil and natural
gas;
- fluctuations in the demand for contract drilling, well
servicing and ancillary oilfield services;
- our customers’ inability to obtain adequate credit or financing
to support their drilling and production activity;
- changes in drilling and well servicing technology which could
reduce demand for certain rigs or put us at a competitive
disadvantage;
- shortages, delays and interruptions in the delivery of
equipment supplies and other key inputs;
- the effects of seasonal and weather conditions on operations
and facilities;
- the availability of qualified personnel and management;
- a decline in our safety performance which could result in lower
demand for our services;
- changes in environmental laws and regulations such as increased
regulation of hydraulic fracturing or restrictions on the burning
of fossil fuels and greenhouse gas emissions, which could have an
adverse impact on the demand for oil and gas;
- terrorism, social, civil and political unrest in the foreign
jurisdictions where we operate;
- fluctuations in foreign exchange, interest rates and tax rates;
and
- other unforeseen conditions which could impact the use of
services supplied by Precision and Precision’s ability to respond
to such conditions.
Readers are cautioned that the forgoing list of
risk factors is not exhaustive. Additional information on these and
other factors that could affect our business, operations or
financial results or those of Post-Arrangement Precision or that
could affect completion of the proposed combination of Precision
and Trinidad are included in reports on file with applicable
securities regulatory authorities, including but not limited to
Precision’s Annual Information Form for the year ended December 31,
2017 and the joint management information circular of Precision and
Trinidad dated November 5, 2018, which may be accessed on
Precision’s SEDAR profile at www.sedar.com or under Precision’s
EDGAR profile at www.sec.gov. The forward-looking information and
statements contained in this news release are made as of the date
hereof and Precision undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, except as
required by law.
About Precision
Precision is a leading provider of safe and High
Performance, High Value services to the oil and gas industry.
Precision provides customers with access to an extensive fleet of
contract drilling rigs, directional drilling services, well service
and snubbing rigs, camps, rental equipment, and wastewater
treatment units 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”.
For further information, please contact:
Carey Ford, CFASenior Vice President and Chief
Financial Officer713.435.6111 Ashley Connolly, CFAManager, Investor
Relations403.716.4725 Precision Drilling Corporation800, 525 - 8th
Avenue S.W.Calgary, Alberta, Canada T2P 1G1Website:
www.precisiondrilling.com
Precision Drilling (NYSE:PDS)
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