Precision Drilling Corporation Announces 2014 First Quarter
Dividend and 2013 Fourth Quarter and Year End Financial Results
CALGARY, ALBERTA--(Marketwired - Feb 13, 2014) -
(Canadian Dollars Except as Indicated)
This news release contains "forward-looking information and
statements" within the meaning of applicable securities laws. For a
full disclosure of the forward-looking information and statements
and the risks to which they are subject, see the "Cautionary
Statement Regarding Forward-Looking Information and Statements"
later in this news release.
The Board of Directors of Precision Drilling Corporation
(TSX:PD) (NYSE:PDS) ("Precision" or the "Corporation") has declared
a first quarter dividend on Precision's common shares of $0.06 per
share, payable on March 14, 2014, to shareholders of record on
February 27, 2014. For Canadian income tax purposes, all dividends
paid by Precision on its common shares are designated as "eligible
dividends", unless otherwise indicated by the Corporation.
Net earnings this quarter were $68 million, or $0.24 per diluted
share, compared to a net loss of $116 million, or $0.42 per diluted
share, in the fourth quarter of 2012. In the fourth quarter of
2012, we recognized charges associated with asset decommissioning
and a goodwill impairment that, combined, reduced net earnings by
$179 million and net earnings per diluted share by $0.63.
Revenue this quarter was $567 million, or 6% higher than the
fourth quarter of 2012, mainly because of higher international and
U.S. drilling activity and higher pricing in Canadian contract
drilling partially offset by lower turnkey activity in the United
States.
Earnings before income taxes, finance charges, foreign exchange,
impairment of goodwill, loss on asset decommissioning and
depreciation and amortization ("adjusted EBITDA") this quarter were
$198 million or 12% higher than the fourth quarter of 2012. Our
adjusted EBITDA margin was 35% this quarter, compared to 33% in the
fourth quarter of 2012. The increase in adjusted EBITDA margin was
mainly due to increases in international and U.S. contract drilling
activity and lower costs in U.S. contract drilling. Our activity
for the quarter, as measured by drilling rig utilization days,
increased 3% in the United States and 43% internationally, and
decreased 1% in Canada compared to the fourth quarter of 2012.
For the year ended December 31, 2013, net earnings were $191
million or $0.66 per diluted share compared to net earnings of $52
million or $0.18 per diluted share in 2012. Revenue for the year
was $2,030 million compared to $2,041 million in 2012. Adjusted
EBITDA totaled $639 million for 2013 compared to $671 million in
2012, a decrease of 5%. Improved pricing in Canada and increased
activity internationally were offset by lower activity levels in
both the Contract Drilling and Completion and Production Services
segments. Activity for Precision in 2013, as measured by drilling
rig utilization days, decreased 6% in Canada and 13% in the United
States compared to 2012, while international activity increased
70%.
Kevin Neveu, Precision's President and Chief Executive Officer,
stated: "Precision's fourth quarter financial performance was a
result of strengthening demand for our Tier 1 rigs, continued
improvement in dayrates and excellent cost control by our drilling
groups. Precision's High Performance, High Value strategy and our
position as a preeminent driller for North America's unconventional
resources is beginning to deliver the financial returns we
expect."
"In the United States our activity bottomed in the second
quarter at 77 rigs and today we are operating 95 rigs and our
fourth quarter results reflect strengthening dayrates and margins.
Our customers clearly recognize the efficiency and performance of
Precision's Tier 1 rig fleet and we are pleased to see this value
realized in our results."
"In our Canadian operations, Precision's focused investments are
providing strong returns from new build and upgraded rigs for
deeper unconventional drilling and pad drilling for heavy oil.
These opportunities provide higher long-term returns compared to
managing our business to meet short-term utilization targets.
Fourth quarter activity was slightly lower than 2012, but
Precision's increasing share of the Tier 1 market is driving
dayrates, which continue to trend upwards with nearly a $1,000 per
day increase year over year."
"The fourth quarter was the first time our international
drilling division delivered results from as many as 12 rigs active,
with modest startup expense drag, contributing to our results at a
more normal run rate. We are optimistic about this division's
performance in 2014 with the two ST-3000 rig deployments in Kuwait
later this year. Additionally, the recent integrated project
management awards could lead to several more rigs in Mexico for
Precision."
"While our Completion and Production Services group continues to
be challenged by low customer demand, I am pleased with our move
into the northern U.S. during 2013. This geographic expansion
leveraged our core completion and production capabilities,
diversified our footprint, and continues to provide the opportunity
to create value for a larger customer base."
"While 2013 may be seen as disappointing in some respects, as
customer demand and activity waned for the first half of the year,
the momentum that began to build in our third quarter and gained
real traction for Precision in the fourth quarter, sets up a strong
start to 2014. The consistently firm oil prices and the
weather-driven improved natural gas prices should prove to be
positive short-term catalysts. Furthermore, crude transportation
debottlenecking and the potential for natural gas exports are
encouraging long-term catalysts for Precision."
"With today's dividend announcement, Precision will have
declared $89 million in dividend payments to shareholders in the
past 14 months," concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING INFORMATION
Financial Highlights
(Stated in thousands of Canadian
dollars, except where noted) |
Three months ended December 31, |
|
|
|
Year ended December 31, |
|
|
|
2013 |
|
2012 |
|
% Change |
|
2013 |
|
2012 |
|
% Change |
|
Revenue |
566,909 |
|
533,948 |
|
6.2 |
|
2,029,977 |
|
2,040,741 |
|
(0.5 |
) |
Adjusted EBITDA(1) |
197,744 |
|
177,026 |
|
11.7 |
|
638,833 |
|
670,792 |
|
(4.8 |
) |
Adjusted EBITDA % of revenue |
34.9 |
% |
33.2 |
% |
|
|
31.5 |
% |
32.9 |
% |
|
|
Net earnings (loss) |
67,921 |
|
(116,339 |
) |
n/m |
|
191,150 |
|
52,360 |
|
265.1 |
|
Cash provided by operations |
94,452 |
|
136,317 |
|
(30.7 |
) |
428,086 |
|
635,286 |
|
(32.6 |
) |
Funds provided by operations(1) |
155,816 |
|
142,576 |
|
9.3 |
|
461,973 |
|
598,812 |
|
(22.9 |
) |
Capital spending: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expansion |
53,734 |
|
123,063 |
|
(56.3 |
) |
282,145 |
|
596,194 |
|
(52.7 |
) |
|
Upgrade |
29,926 |
|
22,706 |
|
31.8 |
|
141,132 |
|
130,094 |
|
8.5 |
|
|
Maintenance and infrastructure |
39,382 |
|
40,881 |
|
(3.7 |
) |
112,527 |
|
141,769 |
|
(20.6 |
) |
|
Proceeds on sale |
(3,351 |
) |
(17,603 |
) |
(81.0 |
) |
(13,372 |
) |
(31,423 |
) |
(57.4 |
) |
Net capital spending |
119,691 |
|
169,047 |
|
(29.2 |
) |
522,432 |
|
836,634 |
|
(37.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) - per share ($): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.24 |
|
(0.42 |
) |
n/m |
|
0.69 |
|
0.19 |
|
263.2 |
|
|
Diluted |
0.24 |
|
(0.42 |
) |
n/m |
|
0.66 |
|
0.18 |
|
266.7 |
|
Dividend paid per share ($) |
0.06 |
|
0.05 |
|
20.0 |
|
0.21 |
|
0.05 |
|
320.0 |
|
(1) |
Adjusted EBITDA and funds provided by operations are additional
GAAP measures. See "ADDITIONAL GAAP MEASURES". |
n/m - calculation not meaningful |
|
Operating Highlights |
|
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
|
|
2013 |
2012 |
% Change |
|
2013 |
2012 |
% Change |
|
Contract drilling rig fleet |
327 |
321 |
1.9 |
|
327 |
321 |
1.9 |
|
Drilling rig utilization days: |
|
|
|
|
|
|
|
|
|
Canada |
8,201 |
8,242 |
(0.5 |
) |
30,530 |
32,352 |
(5.6 |
) |
|
United States |
8,258 |
8,014 |
3.0 |
|
30,268 |
34,597 |
(12.5 |
) |
|
International |
1,052 |
736 |
42.9 |
|
3,555 |
2,086 |
70.4 |
|
Service rig fleet |
222 |
214 |
3.7 |
|
222 |
214 |
3.7 |
|
Service rig operating hours |
71,981 |
77,234 |
(6.8 |
) |
283,576 |
294,681 |
(3.8 |
) |
|
|
|
|
|
|
|
|
|
Financial Position |
|
|
(Stated in thousands of Canadian dollars, except
ratio) |
December 31, 2013 |
December 31, 2012 |
Working capital |
305,783 |
278,021 |
Long-term debt(1) |
1,323,268 |
1,218,796 |
Total
long-term financial liabilities |
1,355,535 |
1,245,290 |
Total
assets |
4,579,123 |
4,300,263 |
Long-term debt to long-term debt plus equity ratio(1) |
0.36 |
0.36 |
(1) |
Net
of unamortized debt issue costs. |
Revenue in the fourth quarter of this year was $33 million
higher than in 2012 mainly because of higher international and U.S.
drilling activity and higher pricing in Canadian contract drilling
partially offset by lower turnkey activity in the United States. In
addition, activity levels in our Completion and Production Services
segment were higher in the United States and lower in Canada.
Compared to the fourth quarter of 2012, revenue from our Contract
Drilling Services segment increased 7% while revenue in our
Completion and Production Services segment remained consistent.
Adjusted EBITDA margin (adjusted EBITDA as a percentage of
revenue) was 35% this quarter, compared to 33% in the fourth
quarter of 2012. The increase in adjusted EBIDTA margin was mainly
due to improved profitability in international and U.S. contract
drilling operations, and new build and upgraded rigs that we have
deployed over the past few years offset by weaker demand for our
completion and production services. Our portfolio of term customer
contracts, a highly variable operating cost structure and economies
achieved through vertical integration of our supply chain all
support the sustainability of our adjusted EBITDA margins.
Our vision is to be recognized as the High Performance, High
Value provider of services for global energy exploration and
development. We work toward that vision by defining and measuring
our results against strategic priorities. Our 2014 priorities are
to:
- Continue to execute our High Performance, High Value strategy.
Invest in Precision's physical and human capital infrastructure to
advance field level professional development, provide industry
leading service to customers and demand safe operations. Continue
to measure and benchmark performance with a view to exceed the high
standards we set.
- Leverage our scale in operations. Utilize established systems
to promote consistent and reliable service and to reduce operating
costs across all geographies and service lines.
- Seize the growth opportunities in front of us. Deliver new
build and upgraded rigs to customer contracts, expand international
activity in existing theatres of operation and grow our Canadian
LNG drilling leadership position. Be a recognized leader in the
integrated directional drilling transformation. Grow U.S. presence
in Completion and Production Services segments.
- Increase returns for our investors.
For the fourth quarter of 2013, the average West Texas
Intermediate price of oil was down slightly from the 2013 yearly
averages while average AECO and Henry Hub natural gas prices were
higher.
|
Three months ended December 31, |
Years ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
Average oil and natural gas prices |
|
|
|
|
Oil |
|
|
|
|
|
West Texas Intermediate (per barrel) (US$) |
97.50 |
88.10 |
98.02 |
94.13 |
Natural gas |
|
|
|
|
|
Canada |
|
|
|
|
|
|
AECO
(per MMBtu) (Cdn$) |
3.53 |
3.20 |
3.18 |
2.39 |
|
United States |
|
|
|
|
|
|
Henry Hub (per MMBtu) (US$) |
3.85 |
3.40 |
3.73 |
2.75 |
Summary for the three months ended December 31,
2013:
- Operating earnings (see "Additional GAAP Measures" in this news
release) this quarter were $108 million, or 19% of revenue,
compared to a loss of $105 million in 2012. In the fourth quarter
of 2012, we recorded a charge of $192 million related to the
decommissioning of 52 drilling rigs, which reduced 2012 operating
earnings. Operating earnings for 2013 were positively impacted by
the increase in activity in our international and U.S. operations
offset by weaker demand for our Canadian completion and production
services, when compared to the fourth quarter in 2012.
- General and administrative expenses this quarter were $34
million, or $4 million higher than the fourth quarter of 2012
primarily because of the year to date true up of incentive
compensation costs tied to the price of our common shares and
operating results.
- Net finance charges were $23 million, an increase of $1 million
compared with the fourth quarter of 2012 due to the increase in
average outstanding debt stated in Canadian dollars.
- Average revenue per utilization day for contract drilling rigs
in Canada increased in the fourth quarter of 2013 to $22,932 from
the prior year fourth quarter of $21,997 and decreased in the
United States to US$23,841 from US$25,465 for the fourth quarter of
2012. The increase in revenue rates for the fourth quarter in
Canada was due to rig mix in part from increased activity days from
Tier 1 rigs compared to the prior year quarter as new build and
upgraded rigs entered the fleet. In the United States, the average
daily rate was down from the prior year because of a reduction in
turnkey activity. Excluding turnkey results, the average U.S.
contract drilling revenue per utilization day increased US$318 from
the fourth quarter of the prior year. In Canada, for the fourth
quarter of 2013, 44% of Precision's utilization days were achieved
from drilling rigs working under term contracts compared to 41% in
the 2012 comparative period. In the United States, for the fourth
quarter of 2013, 62% of Precision's utilization days were generated
from rigs working under term contracts compared to 64% in the 2012
comparative period. Turnkey revenue for the fourth quarter of 2013
was US$17 million, compared with US$32 million in the 2012
comparative period. Within our Completion and Production Services
segment, average hourly rates for service rigs were $878 in the
fourth quarter of 2013 compared to $795 in the fourth quarter of
2012. The increase in the average hourly rate was the result of an
increase in coil tubing hours.
- Average operating costs per utilization day for drilling rigs
in Canada increased in the fourth quarter of 2013 to $10,391 from
the prior year fourth quarter of $10,141 while in the United States
costs decreased to US$14,150 in 2013 from US$16,103 in 2012. The
cost increase in Canada was primarily due to the October crew wage
increase. The cost decrease per day in the United States was
primarily due to lower turnkey activity and cost efficiencies
gained throughout the year. Excluding turnkey results, the average
U.S. contract drilling operating cost per utilization day decreased
US$882 from the fourth quarter of the prior year. Within
Precision's Completion and Production Services segment, average
hourly operating costs for service rigs increased to $703 in the
fourth quarter of 2013 as compared to $594 in the fourth quarter of
2012 primarily due to costs associated with coil tubing and fixed
costs spread over a lower activity base.
- Precision realized revenue from international contract drilling
of $47 million in the fourth quarter of 2013, a $24 million
increase over the prior year period. During the fourth quarter of
2013, one rig contract in Mexico was terminated resulting in lump
sum recognition of revenue of US$3 million with no associated
costs.
- Precision realized revenue from directional services of $31
million in the fourth quarter of 2013, a $4 million decrease from
the prior year period.
- Funds provided by operations (see "Additional GAAP Measures" in
this news release) in the fourth quarter of 2013 were $156 million,
an increase of $13 million from the prior year comparative quarter
of $143 million. The increase is the result of higher earnings for
the quarter compared to last year.
- During December 2013, all of Precision's outstanding warrants
were exercised providing proceeds to Precision of $48 million.
- Capital expenditures for the purchase of property, plant and
equipment were $123 million in the fourth quarter, a decrease of
$64 million over the same period in 2012. Capital spending for the
fourth quarter of 2013 included $54 million for expansion capital,
$30 million for upgrade capital and $39 million for the maintenance
of existing assets and infrastructure spending.
Summary for the year ended December 31, 2013:
- Revenue for 2013 was $2,030 million, a decrease of 1% from
2012.
- Operating earnings were $306 million, an increase of $135
million or 79% from 2012. Operating earnings were 15% of revenue in
2013 compared to 8% in 2012. In 2012, we recorded a charge of $192
million related to the decommissioning of 52 drilling rigs, which
reduced 2012 operating earnings.
- General and administrative costs were $143 million, an increase
of $16 million over 2012 primarily as a result of the increase in
incentive compensation costs tied to the performance of Precision's
common shares and costs associated with administration of increased
international and U.S. activities in 2013.
- Net finance charges were $93 million, an increase of $6 million
from 2012. The increase is primarily due to the increase in average
outstanding debt stated in Canadian dollars.
- Funds provided by operations (see "Additional GAAP Measures" in
this news release) in 2013 were $462 million, a decrease of $137
million from 2012.
- Capital expenditures for the purchase of property, plant and
equipment were $536 million in 2013 a decrease of $332 million over
2012. Capital spending for 2013 included $282 million for expansion
capital, $141 million for upgrade capital and $113 million for the
maintenance of existing assets and infrastructure.
OUTLOOK
Contracts
Our portfolio of term customer contracts provides a base level
of activity and revenue and, as of February 12, 2014, we have term
contracts in place for an average of 57 rigs in Canada, 53 in the
United States and eight internationally for the first quarter of
2014 and an average of 51 rig contracts in Canada, 41 in the United
States and seven internationally for the full year. In Canada, term
contracted rigs normally generate 250 utilization days per year
because of the seasonal nature of well site access. In most regions
in the United States and internationally, term contracts normally
generate 365 utilization days per year.
Drilling Activity
In the United States, our average active rig count in the
quarter was 90 rigs, up three rigs over the fourth quarter in 2012
and up nine rigs over the third quarter of 2013. We currently have
95 rigs active in the United States.
In Canada, our average active rig count in the quarter was 89
rigs, the same as the fourth quarter in 2012 and up six rigs over
the third quarter of 2013. We currently have 144 rigs active in
Canada and expect the strength of drilling activity in the first
quarter to be driven in large part by weather. We expect to benefit
from the fleet enhancements made over the past few years when
compared to the prior year period.
Internationally, our average active rig count in the quarter was
11 rigs, up three rigs over the fourth quarter in 2012 and in line
with the third quarter of 2013. We currently have 11 rigs active
internationally and expect our active rig count to grow over the
next two quarters as two new build rigs for the Kuwait market are
delivered late in the second quarter, and we see potential for
additional rigs going to work in Mexico.
Industry Conditions
To date in 2014, drilling activity has been similar to this time
last year for both Canada and the United States. According to
industry sources, as of February 7, 2014, the U.S. active land
drilling rig count was up about 1% from the same point last year
and the Canadian active land drilling rig count had decreased about
2%. Despite the active industry rig count softness, demand for Tier
1 assets continues to be strong, benefiting drilling contractors,
like Precision, with a high percentage of Tier 1 assets.
Canada has been experiencing an increase in natural gas and gas
liquids drilling activity related to deep basin drilling in
northwestern Alberta and northeastern British Columbia while the
trend towards oil-directed drilling in the United States has
continued in 2014. To date in 2014, approximately 64% of the
Canadian industry's active rigs and 80% of the U.S. industry's
active rigs were drilling for oil targets, compared to 73% for
Canada and 76% for the U.S. at the same time last year.
Capital Spending
Capital spending in 2014 is expected to be $515 million:
- The 2014 capital expenditure plan includes $268 million for
expansion capital, $195 million for sustaining and infrastructure
expenditures, and $52 million to upgrade existing rigs. We expect
that the $515 million will be split $478 million in the Contract
Drilling segment and $37 million in the Completion and Production
Services segment.
- Precision's expansion capital plan includes 11 new build
drilling rigs including six for Canada, two for the United States,
two for Kuwait and one Super Triple ST-1500 rig which will only be
completed once a firm customer contract is secured. The six rigs
for Canada include five ST-1500 rigs for northern gas and gas
liquids drilling and one Precision Super Single for heavy oil
development drilling. The U.S. new builds consist of two ST-1500
rigs while in Kuwait two ST-3000 rigs are expected to be deployed
late in the second quarter. Additional expansion capital is
allocated to equipment for Completion and Production Service, and
long-lead items.
- The 2014 capital plan includes 10 to 14 rig upgrades, four of
which represent the completion of the 2013 rig upgrade
program.
- Precision's sustaining and infrastructure capital plan is based
upon currently anticipated activity levels for 2014 and includes a
technical and operational support centre in Nisku, Alberta along
with regional support facilities and corporate systems. The Nisku
centre consolidates Precision's existing Canadian operations and
technical support centres and will contain a new employee training
centre complete with a fully functional training rig equipped with
the latest drilling technology. The Nisku facility is expected to
support Canadian operations for several decades, provide increased
capacity and efficiency, and ensure that we continue to deliver
services with highly skilled and well trained field personnel. The
portion of the 2014 budget allocated to this facility is
approximately $30 million.
SEGMENTED FINANCIAL RESULTS
Precision's operations are reported in two segments: the
Contract Drilling Services segment, which includes the drilling
rig, directional drilling, trucking, oilfield supply and
manufacturing operations; and the Completion and Production Service
segment which includes the service rig, snubbing, coil tubing,
rental, camp and catering and wastewater treatment operations.
(Stated in thousands of Canadian
dollars) |
Three months ended December 31, |
|
|
|
Year ended December 31, |
|
|
|
2013 |
|
2012 |
|
% Change |
|
2013 |
|
2012 |
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
484,349 |
|
452,104 |
|
7.1 |
|
1,719,910 |
|
1,725,240 |
|
(0.3 |
) |
|
Completion and Production Services |
85,385 |
|
85,225 |
|
0.2 |
|
323,353 |
|
326,079 |
|
(0.8 |
) |
|
Inter-segment eliminations |
(2,825 |
) |
(3,381 |
) |
(16.4 |
) |
(13,286 |
) |
(10,578 |
) |
25.6 |
|
|
566,909 |
|
533,948 |
|
6.2 |
|
2,029,977 |
|
2,040,741 |
|
(0.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
200,271 |
|
172,169 |
|
16.3 |
|
653,664 |
|
649,281 |
|
0.7 |
|
|
Completion and Production Services |
16,261 |
|
22,222 |
|
(26.8 |
) |
61,032 |
|
93,554 |
|
(34.8 |
) |
|
Corporate and Other |
(18,788 |
) |
(17,365 |
) |
8.2 |
|
(75,863 |
) |
(72,043 |
) |
5.3 |
|
|
197,744 |
|
177,026 |
|
11.7 |
|
638,833 |
|
670,792 |
|
(4.8 |
) |
(1) |
See
"ADDITIONAL GAAP MEASURES". |
|
SEGMENT REVIEW OF CONTRACT DRILLING
SERVICES |
|
(Stated in thousands of Canadian
dollars, except where noted) |
Three months ended December 31, |
|
|
|
Year ended December 31, |
|
|
|
2013 |
|
2012 |
|
% Change |
|
2013 |
|
2012 |
|
% Change |
|
Revenue |
484,349 |
|
452,104 |
|
7.1 |
|
1,719,910 |
|
1,725,240 |
|
(0.3 |
) |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
273,107 |
|
270,804 |
|
0.9 |
|
1,019,156 |
|
1,036,553 |
|
(1.7 |
) |
|
General and administrative |
10,971 |
|
9,131 |
|
20.2 |
|
47,090 |
|
39,406 |
|
19.5 |
|
Adjusted EBITDA(1) |
200,271 |
|
172,169 |
|
16.3 |
|
653,664 |
|
649,281 |
|
0.7 |
|
|
Depreciation |
79,687 |
|
78,327 |
|
1.7 |
|
292,217 |
|
271,993 |
|
7.4 |
|
|
Loss on asset decommissioning |
- |
|
192,469 |
|
(100.0 |
) |
- |
|
192,469 |
|
(100.0 |
) |
Operating earnings (loss)(1) |
120,584 |
|
(98,627 |
) |
n/m |
|
361,447 |
|
184,819 |
|
95.6 |
|
Operating earnings (loss) as a percentage of
revenue |
24.9 |
% |
(21.8 |
%) |
|
|
21.0 |
% |
10.7 |
% |
|
|
Drilling rig revenue per utilization day in Canada
(Cdn$) |
22,932 |
|
21,997 |
|
4.3 |
|
22,108 |
|
21,030 |
|
5.1 |
|
Drilling rig revenue per utilization day in the United
States(2) (US$) |
23,841 |
|
25,465 |
|
(6.4 |
) |
23,575 |
|
23,696 |
|
(0.5 |
) |
(1) |
See
"ADDITIONAL GAAP MEASURES". |
(2) |
Includes revenue from idle but contracted rig days. |
n/m - calculation not meaningful |
|
|
Three months ended December 31, |
Canadian onshore drilling statistics:(1) |
2013 |
2012 |
|
Precision |
Industry(2) |
Precision |
Industry(2) |
Number of drilling rigs (end of period) |
187 |
819 |
186 |
822 |
Drilling rig operating days (spud to release) |
7,202 |
32,517 |
7,269 |
30,849 |
Drilling rig operating day utilization |
42% |
43% |
39% |
40% |
Number of wells drilled |
873 |
2,975 |
862 |
2,813 |
Average days per well |
8.2 |
10.9 |
8.4 |
11.0 |
Number of metres drilled (000s) |
1,489 |
6,301 |
1,435 |
5,856 |
Average metres per well |
1,706 |
2,118 |
1,665 |
2,082 |
Average metres per day |
207 |
194 |
197 |
190 |
|
|
|
|
|
|
Year ended December 31, |
Canadian onshore drilling statistics:(1) |
2013 |
2012 |
|
Precision |
Industry(2) |
Precision |
Industry(2) |
Number of drilling rigs (end of period) |
187 |
819 |
186 |
822 |
Drilling rig operating days (spud to release) |
26,983 |
120,043 |
28,848 |
124,319 |
Drilling rig operating day utilization |
39% |
40% |
40% |
42% |
Number of wells drilled |
3,211 |
10,903 |
3,085 |
10,753 |
Average days per well |
8.4 |
11.0 |
9.4 |
11.6 |
Number of metres drilled (000s) |
5,576 |
22,733 |
5,233 |
20,869 |
Average metres per well |
1,736 |
2,085 |
1,696 |
1,941 |
Average metres per day |
207 |
189 |
181 |
168 |
(1) |
Canadian operations only. |
(2) |
Canadian Association of Oilwell Drilling Contractors ("CAODC") and
Precision - excludes non-CAODC rigs and non-reporting CAODC
members. |
|
|
United States onshore drilling statistics:(1) |
2013 |
2012 |
|
Precision |
Industry(2) |
Precision |
Industry(2) |
Average number of active land rigs for quarters
ended: |
|
|
|
|
|
March
31 |
81 |
1,706 |
104 |
1,947 |
|
June
30 |
80 |
1,710 |
97 |
1,924 |
|
September 30 |
81 |
1,709 |
90 |
1,855 |
|
December 31 |
90 |
1,697 |
87 |
1,759 |
Annual average |
83 |
1,705 |
95 |
1,871 |
(1) |
United States lower 48 land operations only. |
(2) |
Baker
Hughes rig counts. |
Revenue from Contract Drilling Services was $484 million this
quarter, or 7% higher than the fourth quarter of 2012, while
adjusted EBITDA increased by 16% to $200 million. The increases
were mainly due to higher drilling rig utilization in our
international business and in the United States as well as higher
average dayrates in the Canadian market partially offset by lower
turnkey activity in the United States.
Operating results for our international business improved as we
averaged 11 rigs working compared to eight in the prior year
comparative quarter. Drilling utilization days in our international
operations for the quarter were 1,052 days, 43% higher than the
prior year comparative period.
Drilling rig utilization days in Canada (drilling days plus move
days) during the fourth quarter of 2013 were 8,201, a decrease of
1% compared to 2012 while drilling rig utilization days in the
United States were 8,258, or 3% higher than the same quarter of
2012. The increase in U.S. activity was primarily due to strong
demand for Tier 1 assets and resulted in market share gains by
Precision during the second half of the year. The majority of our
North America activity came from oil and liquids-rich natural gas
related plays.
Drilling rig revenue per utilization day was up 4% in Canada and
down 6% in the U.S. compared to the same quarter in 2012. The
increase in average dayrates for Canada was the result of improved
rig mix and continued demand for Tier 1 assets. In the U.S., the
decrease in the average dayrate was driven by lower turnkey
revenue.
In Canada, 44% of utilization days in the fourth quarter were
generated from rigs under term contract, compared to 41% in the
fourth quarter of 2012. In the U.S., 62% of utilization days were
generated from rigs under term contract as compared to 64% in the
fourth quarter of 2012. At the end of the quarter, we had 57
drilling rigs under contract in Canada, 58 in the U.S. and 10
internationally.
Operating costs were 56% of revenue for the quarter, which was
four percentage points lower than the prior year period. On a per
utilization day basis, operating costs for the drilling rig
division in Canada were above the prior year primarily because of
an increase in crew wage expense. In the U.S., operating costs for
the quarter on a per day basis were down from the fourth quarter in
2012 as a result of proportionately lower turnkey activity and cost
savings from operational efficiencies.
Depreciation expense in the quarter was 2% higher than in the
fourth quarter of 2012 due to an increase in overall drilling
activity and a greater proportion of operating days from our Tier 1
drilling rigs in 2013 relative to 2012. With the exception of
certain PSST drilling rigs and directional drilling equipment,
contract drilling operations use the unit of production method of
calculating depreciation.
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES
(Stated in thousands of Canadian
dollars, except where noted) |
Three months ended December 31, |
|
|
|
Year ended December 31, |
|
|
|
2013 |
|
2012 |
|
% Change |
|
2013 |
|
2012 |
|
% Change |
|
Revenue |
85,385 |
|
85,225 |
|
0.2 |
|
323,353 |
|
326,079 |
|
(0.8 |
) |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
65,199 |
|
59,383 |
|
9.8 |
|
242,768 |
|
217,326 |
|
11.7 |
|
|
General and administrative |
3,925 |
|
3,620 |
|
8.4 |
|
19,553 |
|
15,199 |
|
28.6 |
|
Adjusted EBITDA(1) |
16,261 |
|
22,222 |
|
(26.8 |
) |
61,032 |
|
93,554 |
|
(34.8 |
) |
|
Depreciation |
8,324 |
|
8,983 |
|
(7.3 |
) |
32,630 |
|
30,758 |
|
6.1 |
|
Operating earnings(1) |
7,937 |
|
13,239 |
|
(40.0 |
) |
28,402 |
|
62,796 |
|
(54.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings as a percentage of revenue |
9.3 |
% |
15.5 |
% |
|
|
8.8 |
% |
19.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well servicing statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of service rigs (end of period) |
222 |
|
214 |
|
3.7 |
|
222 |
|
214 |
|
3.7 |
|
|
Service rig operating hours |
71,981 |
|
77,234 |
|
(6.8 |
) |
283,576 |
|
294,681 |
|
(3.8 |
) |
|
Service rig operating hour utilization |
35 |
% |
38 |
% |
|
|
36 |
% |
38 |
% |
|
|
|
Service rig revenue per operating hour (Cdn$) |
878 |
|
795 |
|
10.4 |
|
854 |
|
744 |
|
14.8 |
|
(1) |
See
"ADDITIONAL GAAP MEASURES". |
Revenue from Completion and Production Services was in line with
the fourth quarter of 2012, as weaker demand in the Canadian market
offset the expansion of services in the United States. Activity in
Canadian well servicing was down 16% but was offset by a 158%
increase is U.S. well servicing activity and higher average hourly
rates in both Canada and the United States. Adjusted EBITDA was $6
million lower than the fourth quarter of 2012 due to weaker demand
in Canada and higher costs in the United States.
Well servicing activity in the fourth quarter was 7% lower than
the fourth quarter of 2012, as lower customer demand in Canada
partially offset our growing U.S. presence. Approximately 83% of
the fourth quarter service rig activity was oil related. Our rental
division activity in the fourth quarter was lower than the fourth
quarter of 2012 mainly due to the excess amount of surface storage
capacity in Western Canada.
Average service rig revenue per operating hour in the fourth
quarter was $878, or $83 higher than the fourth quarter of 2012.
The increase was primarily the result of increased coil tubing
operations in the current quarter, which operate at higher
rates.
Operating costs as a percentage of revenue increased to 76% in
the fourth quarter of 2013, from 70% in the fourth quarter of 2012.
Operating costs per service rig operating hour were higher than in
the fourth quarter of 2012 mainly because of the increase in costs
associated with the new coil tubing operations and fixed costs
spread over a lower activity base.
Depreciation in the fourth quarter of 2013 was 7% lower than the
fourth quarter of 2012 because of lower equipment utilization and
losses on disposal realized in the prior year comparative quarter.
We use the straight-line method of calculating depreciation for our
completion and production business lines, except for the well
servicing division, where we use the unit of production method.
SEGMENT REVIEW OF CORPORATE AND OTHER
Our Corporate and Other segment provides support functions to
our operating segments. The Corporate and Other segment had an
adjusted EBITDA loss of $19 million for the fourth quarter of 2013,
$1 million higher than the prior year comparative period due to
higher incentive plan compensation.
OTHER ITEMS
Net financial charges for the quarter were $23 million, an
increase of $1 million from the fourth quarter of 2012.
We had a foreign exchange gain of $4 million during the fourth
quarter of 2013 due to the weakening of the Canadian dollar versus
the U.S. dollar, which affected the net U.S. dollar denominated
monetary position in the Canadian dollar-based companies.
Income tax expense for the quarter was $20 million compared with
a recovery of $61 million in the same quarter in 2012. The increase
is primarily the result of an increase in operating results.
In June 2013, a wholly owned subsidiary of Precision lost a tax
appeal in the Ontario Superior Court of Justice related to a
reassessment of Ontario income tax for the subsidiary's 2001
through 2004 taxation years. Precision has appealed the decision to
the Ontario Court of Appeal and we expect this appeal to be heard
in the latter half of 2014. Despite the decision in the Superior
Court, management believes it is more likely than not that
Precision will prevail on appeal. Should Precision lose on appeal,
approximately $55 million of the long-term income tax recoverable
related to this issue would be expensed.
LIQUIDITY AND CAPITAL RESOURCES
The oilfield services business is inherently cyclical in nature.
To manage this, we focus on maintaining a strong balance sheet so
we have the financial flexibility we need to continue to manage our
growth and cash flow, no matter where we are in the business
cycle.
We apply a disciplined approach to managing and tracking results
of our operations to keep costs down. We maintain a variable cost
structure so we can be responsive to changes in demand.
Our maintenance capital expenditures are tightly governed by and
highly responsive to activity levels with additional cost savings
leverage provided through our internal manufacturing and supply
divisions. Term contracts on expansion capital for new build rig
programs provide more certainty of future revenues and return on
our capital investments.
Liquidity
As at December 31, 2013, our liquidity was supported by a cash
balance of $81 million, an undrawn balance on our senior secured
credit facility of approximately US$793 million availability on our
operating facilities totaling approximately $40 million and
approximately US$25 million available on a secured facility for
letters of credit
At December 31, 2013, including letters of credit, we had
approximately $1,394 million outstanding under our secured and
unsecured credit facilities and $23 million in unamortized debt
issue costs.
Amount |
|
Availability |
|
Used for |
|
Maturity |
Senior facility (secured) |
|
|
|
|
|
|
US$850 million (extendible, revolving term credit facility with
US$250 million accordion feature) |
|
Drawn US$28 million and US$28 million in outstanding letters of
credit |
|
General corporate purposes |
|
November 17, 2018 |
Operating facilities (secured) |
|
|
|
|
$40 million |
|
Undrawn, except $17 million in outstanding letters of credit |
|
Letters of credit and general corporate purposes |
|
|
US$15 million |
|
Undrawn |
|
Short term working capital requirements |
|
|
Demand letter of credit facility (secured) |
US$25 million |
|
Undrawn, except $0.2 million in outstanding letters of credit |
|
Letters of credit |
|
|
Senior notes (unsecured) |
|
|
|
|
$200 million |
|
Fully drawn |
|
Debt repayment |
|
March 15, 2019 |
US$650 million |
|
Fully drawn |
|
Debt repayment and general corporate purposes |
|
November 15, 2020 |
US$400 million |
|
Fully drawn |
|
Capital expenditures and general corporate purposes |
|
December 15, 2021 |
Our secured facility includes financial ratio covenants that are
tested quarterly; we are compliant with these covenants and expect
to remain compliant.
The current blended cash interest cost of our debt is about
6.5%.
Hedge of investments in U.S. operations
We have designated our U.S. dollar denominated long-term debt as
a hedge of our investment in our operations in the United States.
To be accounted for as a hedge, the foreign currency denominated
long-term debt must be designated and documented as such and must
be effective at inception and on an ongoing basis. We recognize the
effective amount of this hedge (net of tax) in other comprehensive
income. We recognize ineffective amounts (if any) in earnings.
Average shares outstanding
In December 2013, we issued 15 million shares upon the exercise
of warrants for cash of $48 million. The following table reconciles
the weighted average shares outstanding used in computing basic and
diluted earnings per share:
|
Three months ended December 31, |
Year ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
Weighted average shares outstanding - basic |
280,388 |
276,372 |
277,583 |
276,276 |
Effect of warrants |
7,710 |
8,661 |
9,327 |
9,418 |
Effect of share options and other equity compensation plans |
913 |
780 |
971 |
933 |
Weighted average shares outstanding - diluted |
289,011 |
285,813 |
287,881 |
286,627 |
|
|
|
|
|
QUARTERLY FINANCIAL SUMMARY |
(Stated in thousands of Canadian
dollars, except per share amounts) |
|
2013 |
Quarters ended |
March 31 |
June 30 |
|
September 30 |
December 31 |
Revenue |
595,720 |
378,898 |
|
488,450 |
566,909 |
Adjusted EBITDA(1) |
215,181 |
88,248 |
|
137,660 |
197,744 |
Net earnings: |
93,313 |
473 |
|
29,443 |
67,921 |
|
Per
basic share |
0.34 |
0.00 |
|
0.11 |
0.24 |
|
Per
diluted share |
0.33 |
0.00 |
|
0.10 |
0.24 |
Funds provided by operations(1) |
144,682 |
33,791 |
|
127,684 |
155,816 |
Cash provided by operations |
62,948 |
182,345 |
|
88,341 |
94,452 |
Dividends per share |
0.05 |
0.05 |
|
0.05 |
0.06 |
|
|
|
|
|
|
|
2012 |
|
Quarters ended |
March 31 |
June 30 |
|
September 30 |
December 31 |
|
Revenue |
640,066 |
381,966 |
|
484,761 |
533,948 |
|
Adjusted EBITDA(1) |
245,574 |
97,192 |
|
151,000 |
177,026 |
|
Net earnings (loss): |
111,081 |
18,261 |
|
39,357 |
(116,339 |
) |
|
Per
basic share |
0.40 |
0.07 |
|
0.14 |
(0.42 |
) |
|
Per
diluted share |
0.39 |
0.06 |
|
0.14 |
(0.42 |
) |
Funds provided by operations(1) |
247,739 |
62,373 |
|
146,124 |
142,576 |
|
Cash provided by operations |
162,440 |
275,346 |
|
61,183 |
136,317 |
|
Dividends per share |
- |
- |
|
- |
0.05 |
|
(1) |
See "ADDITIONAL GAAP MEASURES". |
ADDITIONAL GAAP MEASURES
We reference Generally Accepted Accounting Principles (GAAP)
measures that are not defined terms under International Financial
Reporting Standards to assess performance because we believe they
provide useful supplemental information to investors.
Adjusted EBITDA
We believe that adjusted EBITDA (earnings before income taxes,
financing charges, foreign exchange, impairment of goodwill, loss
on asset decommissioning and depreciation and amortization) as
reported in the Consolidated Statement of Earnings (Loss) is a
useful measure, because it gives an indication of the results from
our principal business activities prior to consideration of how our
activities are financed and the impact of foreign exchange,
taxation and non-cash depreciation and amortization charges.
Operating Earnings (Loss)
We believe that operating earnings (loss), as reported in the
Consolidated Statements of Earnings (Loss), is a useful measure
because it provides an indication of the results of our principal
business activities before consideration of how those activities
are financed and the impact of foreign exchange and taxation.
Funds Provided by Operations
We believe that funds provided by operations, as reported in the
Consolidated Statements of Cash Flow is a useful measure because it
provides an indication of the funds our principal business
activities generate prior to consideration of working capital,
which is primarily made up of highly liquid balances.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND
STATEMENTS
Certain statements contained in this report, 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: the payment of our
declared first quarter dividend; the expected deployment of two
additional rigs to Kuwait and our increased market penetration in
Mexico; our plans to continue executing our High Performance, High
Value strategy; our plans to leverage our scale in operations to
promote consistent and reliable service and to reduce our operating
costs; our ability to deliver new build and upgraded rigs to our
customers on a timely basis; our plans to expand our international
activity in existing theatres of operation, to grow our Canadian
LNG drilling leadership position and to grow our Completion and
Production Services segment in the U.S.; delivering increased
returns for our investors; the expected weather impact on our
Canadian drilling operations; our capital spending plans and
projections including plans to expand our fleet with 11 new build
drilling rigs and the upgrading of 10 to 14 existing rigs; the
expected completion of our Nisku technical support centre and its
future impact on our operational capabilities; the appeal process
and potential liability arising from the income tax reassessment in
Ontario of one of our wholly-owned subsidiaries; and our ability to
remain compliant with our financial ratio covenants under our
secured facility.
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 and expected future developments as well as other
factors we believe are appropriate in the circumstances. However,
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: fluctuations in the
price and demand for oil and natural gas; fluctuations in the level
of oil and natural gas exploration and development activities;
fluctuations in the demand for contract drilling, well servicing
and ancillary oilfield services; capital market liquidity available
to fund customer drilling programs; availability of cash flow, debt
and/or equity sources to fund Precision's capital and operating
requirements, as needed; sustainability of our dividend; the
effects of seasonal and weather conditions on operations and
facilities; the existence of competitive operating risks inherent
in our businesses; general economic, market or business conditions;
changes in laws or regulations; the availability of qualified
personnel, management or other key inputs; currency exchange
fluctuations; and other unforeseen conditions which could impact
the use of services supplied by Precision and Precision's ability
to respond to such conditions.
Consequently, all of the forward-looking information and
statements made in this report are qualified by these cautionary
statements and there can be no assurance that the actual results or
developments anticipated by Precision will be realized or, even if
substantially realized, that they will have the expected
consequences to, or effects on, Precision or its business or
operations. Readers are therefore cautioned not to place undue
reliance on such forward-looking information and statements. Except
as may be required by law, Precision assumes no obligation to
update publicly any such forward-looking information and
statements, whether as a result of new information, future events
or otherwise.
table
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION (UNAUDITED) |
|
|
|
|
|
December 31, |
|
December 31, |
|
(Stated in thousands of Canadian dollars) |
2013 |
|
2012 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
|
Cash |
$80,606 |
|
$
152,768 |
|
|
Accounts receivable |
549,697 |
|
509,547 |
|
|
Inventory |
12,378 |
|
13,787 |
|
Total current assets |
642,681 |
|
676,102 |
|
Non-current assets: |
|
|
|
|
|
Income tax recoverable |
58,435 |
|
64,579 |
|
|
Property, plant and equipment |
3,561,734 |
|
3,242,929 |
|
|
Intangibles |
3,917 |
|
6,101 |
|
|
Goodwill |
312,356 |
|
310,552 |
|
Total non-current assets |
3,936,442 |
|
3,624,161 |
|
Total assets |
$4,579,123 |
|
$4,300,263 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable and accrued
liabilities |
$332,838 |
|
$333,893 |
|
|
Income tax
payable |
4,060 |
|
64,188 |
|
Total current liabilities |
336,898 |
|
398,081 |
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
Share based compensation |
14,431 |
|
8,676 |
|
|
Provisions and other |
17,836 |
|
17,818 |
|
|
Long-term debt |
1,323,268 |
|
1,218,796 |
|
|
Deferred
tax liabilities |
487,347 |
|
485,592 |
|
Total non-current
liabilities |
1,842,882 |
|
1,730,882 |
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Shareholders' capital |
2,305,227 |
|
2,251,982 |
|
|
Contributed surplus |
29,175 |
|
24,474 |
|
|
Retained earnings (deficit) |
88,416 |
|
(44,621 |
) |
|
Accumulated other comprehensive loss |
(23,475 |
) |
(60,535 |
) |
|
Total
shareholders' equity |
2,399,343 |
|
2,171,300 |
|
Total liabilities and shareholders' equity |
$4,579,123 |
|
$4,300,263 |
|
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED) |
|
|
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
(Stated in thousands of Canadian dollars, except
per share amounts) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
566,909 |
|
$ |
533,948 |
|
$ |
2,029,977 |
|
$ |
2,040,741 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
335,480 |
|
|
326,806 |
|
|
1,248,637 |
|
|
1,243,301 |
|
|
General and administrative |
|
33,685 |
|
|
30,116 |
|
|
142,507 |
|
|
126,648 |
|
Earnings before income taxes, finance charges, foreign
exchange, impairment of goodwill, loss on asset decommissioning and
depreciation and amortization |
|
197,744 |
|
|
177,026 |
|
|
638,833 |
|
|
670,792 |
|
Depreciation and amortization |
|
90,142 |
|
|
89,278 |
|
|
333,159 |
|
|
307,525 |
|
Loss on asset decommissioning |
|
- |
|
|
192,469 |
|
|
- |
|
|
192,469 |
|
Operating earnings (loss) |
|
107,602 |
|
|
(104,721 |
) |
|
305,674 |
|
|
170,798 |
|
Impairment of goodwill |
|
- |
|
|
52,539 |
|
|
- |
|
|
52,539 |
|
Foreign exchange |
|
(3,687 |
) |
|
(1,857 |
) |
|
(9,112 |
) |
|
3,753 |
|
Finance charges |
|
23,328 |
|
|
22,107 |
|
|
93,248 |
|
|
86,829 |
|
Earnings (loss) before income taxes |
|
87,961 |
|
|
(177,510 |
) |
|
221,538 |
|
|
27,677 |
|
Income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
14,681 |
|
|
23,416 |
|
|
45,017 |
|
|
70,576 |
|
|
Deferred |
|
5,359 |
|
|
(84,587 |
) |
|
(14,629 |
) |
|
(95,259 |
) |
|
|
20,040 |
|
|
(61,171 |
) |
|
30,388 |
|
|
(24,683 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
67,921 |
|
$ |
(116,339 |
) |
$ |
191,150 |
|
$ |
52,360 |
|
Net earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.24 |
|
$ |
(0.42 |
) |
$ |
0.69 |
|
$ |
0.19 |
|
|
Diluted |
$ |
0.24 |
|
$ |
(0.42 |
) |
$ |
0.66 |
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS) (UNAUDITED) |
|
|
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
(Stated in thousands of Canadian dollars) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Net
earnings (loss) |
$ |
67,921 |
|
$ |
(116,339 |
) |
$ |
191,150 |
|
$ |
52,360 |
|
Unrealized gain (loss) on translation of assets and liabilities of
operations denominated in foreign currency |
|
57,780 |
|
|
16,598 |
|
|
109,195 |
|
|
(32,878 |
) |
Foreign exchange gain (loss) on net investment hedge with U.S.
denominated debt, net of tax |
|
(36,855 |
) |
|
(10,228 |
) |
|
(72,135 |
) |
|
23,205 |
|
Comprehensive income (loss) |
$ |
88,846 |
|
$ |
(109,969 |
) |
$ |
228,210 |
|
$ |
42,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED) |
|
|
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
(Stated in thousands of Canadian dollars) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
67,921 |
|
$ |
(116,339 |
) |
$ |
191,150 |
|
$ |
52,360 |
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term compensation plans |
|
4,231 |
|
|
4,293 |
|
|
20,708 |
|
|
19,350 |
|
|
|
Depreciation and amortization |
|
90,142 |
|
|
89,278 |
|
|
333,159 |
|
|
307,525 |
|
|
|
Loss
on asset decommissioning |
|
- |
|
|
192,469 |
|
|
- |
|
|
192,469 |
|
|
|
Impairment of goodwill |
|
- |
|
|
52,539 |
|
|
- |
|
|
52,539 |
|
|
|
Foreign exchange |
|
(4,703 |
) |
|
(1,689 |
) |
|
(9,216 |
) |
|
4,403 |
|
|
|
Finance charges |
|
23,328 |
|
|
22,107 |
|
|
93,248 |
|
|
86,829 |
|
|
|
Income taxes |
|
20,040 |
|
|
(61,171 |
) |
|
30,388 |
|
|
(24,683 |
) |
|
|
Other |
|
(3,345 |
) |
|
(1,019 |
) |
|
(3,754 |
) |
|
1,018 |
|
|
|
Income taxes paid |
|
(6,651 |
) |
|
(3,088 |
) |
|
(109,326 |
) |
|
(10,403 |
) |
|
|
Income taxes recovered |
|
1,674 |
|
|
108 |
|
|
3,761 |
|
|
721 |
|
|
|
Interest paid |
|
(37,276 |
) |
|
(35,287 |
) |
|
(89,156 |
) |
|
(85,251 |
) |
|
|
Interest received |
|
455 |
|
|
375 |
|
|
1,011 |
|
|
1,935 |
|
Funds provided by operations |
|
155,816 |
|
|
142,576 |
|
|
461,973 |
|
|
598,812 |
|
Changes in non-cash working capital balances |
|
(61,364 |
) |
|
(6,259 |
) |
|
(33,887 |
) |
|
36,474 |
|
|
|
94,452 |
|
|
136,317 |
|
|
428,086 |
|
|
635,286 |
|
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisitions, net of cash acquired |
|
- |
|
|
- |
|
|
- |
|
|
(25 |
) |
|
Purchase of property, plant and equipment |
|
(123,042 |
) |
|
(186,650 |
) |
|
(535,804 |
) |
|
(868,057 |
) |
|
Proceeds on sale of property, plant and equipment |
|
3,351 |
|
|
17,603 |
|
|
13,372 |
|
|
31,423 |
|
|
Changes in income tax recoverable |
|
6,144 |
|
|
- |
|
|
6,144 |
|
|
- |
|
|
Changes in non-cash working capital balances |
|
(26,690 |
) |
|
(31,052 |
) |
|
(10,247 |
) |
|
(93,462 |
) |
|
|
(140,237 |
) |
|
(200,099 |
) |
|
(526,535 |
) |
|
(930,121 |
) |
Financing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
(16,618 |
) |
|
(13,821 |
) |
|
(58,113 |
) |
|
(13,821 |
) |
|
Debt issue costs |
|
- |
|
|
- |
|
|
(883 |
) |
|
(2,855 |
) |
|
Debt facility amendment costs |
|
- |
|
|
- |
|
|
- |
|
|
(149 |
) |
|
Increase in long-term debt |
|
14,781 |
|
|
- |
|
|
29,781 |
|
|
- |
|
|
Issuance of common shares on the exercise of
options |
|
278 |
|
|
436 |
|
|
2,432 |
|
|
1,926 |
|
|
Issuance of common shares on the exercise of
warrants |
|
48,300 |
|
|
- |
|
|
48,300 |
|
|
- |
|
|
|
46,741 |
|
|
(13,385 |
) |
|
21,517 |
|
|
(14,899 |
) |
Effect of exchange rate changes on cash and cash
equivalents |
|
(2,165 |
) |
|
3,094 |
|
|
4,770 |
|
|
(4,974 |
) |
Decrease in cash and cash equivalents |
|
(1,209 |
) |
|
(74,073 |
) |
|
(72,162 |
) |
|
(314,708 |
) |
Cash and cash equivalents, beginning of period |
|
81,815 |
|
|
226,841 |
|
|
152,768 |
|
|
467,476 |
|
Cash and cash equivalents, end of period |
$ |
80,606 |
|
$ |
152,768 |
|
$ |
80,606 |
|
$ |
152,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY (UNAUDITED) |
|
(Stated in thousands of Canadian
dollars) |
|
Shareholders' capital |
Contributed surplus |
|
Accumulated other comprehensive loss |
|
|
Retained earnings (deficit |
) |
Total equity |
|
Balance at January 1, 2013 |
$
2,251,982 |
$
24,474 |
|
$
(60,535 |
) |
|
$
(44,621 |
) |
$
2,171,300 |
|
Net
earnings for the period |
- |
- |
|
- |
|
|
191,150 |
|
191,150 |
|
Other
comprehensive income for the period |
- |
- |
|
37,060 |
|
|
- |
|
37,060 |
|
Dividends |
- |
- |
|
- |
|
|
(58,113 |
) |
(58,113 |
) |
Share
options exercised |
3,707 |
(1,275 |
) |
- |
|
|
- |
|
2,432 |
|
Shares issued on redemption of non-management directors DSUs |
1,238 |
(1,031 |
) |
- |
|
|
- |
|
207 |
|
Warrants exercised |
48,300 |
- |
|
- |
|
|
- |
|
48,300 |
|
Share based compensation expense |
- |
7,007 |
|
- |
|
|
- |
|
7,007 |
|
Balance at December 31, 2013 |
$ 2,305,227 |
$ 29,175 |
|
$ (23,475 |
) |
|
$ 88,416 |
|
$ 2,399,343 |
|
|
|
|
|
|
|
|
|
|
|
|
(Stated in thousands of Canadian
dollars) |
|
Shareholders' capital |
Contributed surplus |
|
Accumulated other comprehensive loss |
|
|
Deficit |
|
Total equity |
|
Balance at January 1, 2012 |
$
2,248,217 |
$
18,396 |
|
$
(50,862 |
) |
|
$
(83,160 |
) |
$
2,132,591 |
|
Net
earnings for the period |
- |
- |
|
- |
|
|
52,360 |
|
52,360 |
|
Other
comprehensive loss for the period |
- |
- |
|
(9,673 |
) |
|
- |
|
(9,673 |
) |
Dividends |
- |
- |
|
- |
|
|
(13,821 |
) |
(13,821 |
) |
Share
options exercised |
3,050 |
(1,124 |
) |
- |
|
|
- |
|
1,926 |
|
Shares issued on redemption of non-management directors DSUs |
706 |
(706 |
) |
- |
|
|
- |
|
- |
|
Shares issued on waiver of right to dissent by dissenting
unitholder |
9 |
(3 |
) |
- |
|
|
- |
|
6 |
|
Share based compensation expense |
- |
7,911 |
|
- |
|
|
- |
|
7,911 |
|
Balance at December 31, 2012 |
$ 2,251,982 |
$ 24,474 |
|
$ (60,535 |
) |
|
$ (44,621 |
) |
$ 2,171,300 |
|
FOURTH QUARTER 2014 EARNINGS CONFERENCE CALL AND WEBCAST
Precision Drilling Corporation has scheduled a conference call
and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on
Thursday, February 13, 2014.
The conference
call dial in numbers are 1-866-226-1793 or 416-340-2216.
A live webcast of the conference call will be accessible on
Precision's website at www.precisiondrilling.com by selecting
"Investor Centre", then "Webcasts". Shortly after the live webcast,
an archived version will be available for approximately 30
days.
An archived recording of the conference call will be available
approximately one hour after the completion of the call until March
13, 2014 by dialing 1-800-408-3053 or 905-694-9451, passcode
5078039.
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, coil tubing services, 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".
Precision Drilling CorporationCarey FordVice President, Finance
and Investor Relations403.716.4575403.716.4755Precision Drilling
CorporationSuite 800, 525 - 8th Avenue S.W.Calgary, Alberta, Canada
T2P 1G1www.precisiondrilling.com
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