Precision Drilling Corporation announces results for the second
quarter CALGARY, July 28 /PRNewswire-FirstCall/ -- Precision
Drilling Corporation ("Precision" or the "Corporation") announced
today that net earnings for the second quarter of 2005 was $25.9
million or $0.21 per diluted share, compared to $16.0 million or
$0.14 per diluted share for the second quarter of 2004. Net
earnings from continuing operations was $9.3 million or $0.07 per
diluted share compared to $10.1 million or $0.09 per diluted share
in 2004. During the quarter, the Corporation entered into a
definitive agreement to sell its Energy Services and International
Contract Drilling divisions for approximately US$2.28 billion with
the transaction expected to close on or about September 1, 2005.
The Corporation is also negotiating with a third party for the sale
of its industrial and plant maintenance business carried on by
CEDA. As a result, these businesses have been classified as
discontinued operations with continuing operations now being
comprised of Canadian contract drilling, service rig, snubbing,
rentals, and related services businesses. With respect to the
continuing businesses, the Corporation announced in June 2005 that
it was undertaking an examination of the available strategic
alternatives, including determining the viability and method of
conversion to an income trust. Although the Board of Directors has
not made any decision with respect to any specific course of action
at this time, it has retained the appropriate financial,
accounting, legal and tax advisors to assist it in identifying and
assessing issues pertaining to a conversion to an income trust. Any
conversion alternatives available to Precision will be subject to
review by, and approval of the Board of Directors and will also be
subject to receipt of all required shareholder and regulatory
approvals. Results of Continuing Operations Three Months Ended June
30, 2005 2004 % Change
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Number of drilling rigs (end of period) 229 225 1.8 Drilling
operating days 6,049 5,279 14.6 Drilling revenue per operating day
16,578 15,561 6.5 Number of service rigs (end of period) 239 239 -
Service rig operating hours 72,814 80,986 (10.1) Service revenue
per operating hour 530 458 15.7
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Six Months Ended June 30, 2005 2004 % Change
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Number of drilling rigs (end of period) 229 225 1.8 Drilling
operating days 20,048 20,047 - Drilling revenue per operating day
17,951 16,506 8.7 Number of service rigs (end of period) 239 239 -
Service rig operating hours 212,488 231,679 (8.3) Service revenue
per operating hour 576 507 13.6
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As usual in the second quarter, weather conditions were a
significant factor affecting activity levels. An early spring
break-up and dry conditions in May were boding well for a very
strong second quarter. These favorable conditions came to an abrupt
halt in June as record rainfall in Alberta slowed the movement of
oilfield equipment. Demand for all services remains very strong
with winter rates being maintained for the most part throughout the
second quarter. The healthy backlog of work should give service
providers pricing leverage going into the upcoming winter season.
Operating costs have escalated somewhat as a result of crew wage
increases implemented in October 2004 and increases in third party
materials and labor required for our equipment maintenance
programs. General and administrative costs have increased year over
year due to a number of factors including increased expense
associated with options granted in the last half of 2004, financial
advisory and legal fees, severance costs and additional expenses
related to both internal and external audit functions. The
effective tax rate has increased in 2005 as a result of the
increased options expense, which is not deductible for tax
purposes, and as a result of a tax law change in the second quarter
that was effective January 1, 2005. Certain statements contained in
this press release may contain words such as "anticipate", "could",
"should", "expect", "believe", "will" and similar expressions and
statements relating to matters that are not historical facts. These
statements are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements
involve known and unknown risks and uncertainties which may cause
the actual results, performance 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 regulations, to which
Precision is subject and other factors, which are described in
further detail in Precision's filings with the US Securities and
Exchange Commission. CONSOLIDATED STATEMENTS OF EARNINGS AND
RETAINED EARNINGS CDN $000's, except Three Months Ended Six Months
Ended per share amounts June 30, June 30, (unaudited) 2005 2004
2005 2004
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Revenue $ 157,895 $ 134,963 $ 541,302 $ 496,487 Expenses: Operating
101,580 92,253 291,113 279,133 General and administrative 20,215
12,031 40,009 31,009 Depreciation and amortization 11,804 11,779
33,173 35,721 Foreign exchange (209) (5,165) (518) (5,011)
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133,390 110,898 363,777 340,852
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Operating earnings 24,505 24,065 177,525 155,635 Interest 10,802
10,257 22,341 18,201 Gain on disposal of investments - (42) - (42)
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Earnings from continuing operations before income taxes 13,703
13,850 155,184 137,476 Income taxes: Current 662 13,755 44,687
34,014 Future 3,733 (10,032) 12,908 12,908
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4,395 3,723 57,595 46,922
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Earnings from continuing operations 9,308 10,127 97,589 90,554
Discontinued operations, net of tax 16,543 5,868 66,780 25,960
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Net earnings 25,851 15,995 164,369 116,514 Retained earnings,
beginning of period 1,180,201 894,798 1,041,683 794,279
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Retained earnings, end of period $ 1,206,052 $ 910,793 $ 1,206,052
$ 910,793
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Earnings per share from continuing operations: Basic $ 0.08 $ 0.09
$ 0.80 $ 0.81 Diluted $ 0.07 $ 0.09 $ 0.78 $ 0.80
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Earnings per share: Basic $ 0.21 $ 0.14 $ 1.34 $ 1.05 Diluted $
0.21 $ 0.14 $ 1.32 $ 1.03
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Common shares outstanding (000's) 122,762 111,817 122,762 111,817
Weighted average shares outstanding (000's) 122,727 111,741 122,521
111,353 Diluted shares outstanding (000's) 125,013 113,098 124,765
112,858 CONSOLIDATED BALANCE SHEETS June 30, December 31, CDN
$000's 2005 2004
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(unaudited) Assets Current assets: Cash and cash equivalents $
306,538 $ 122,012 Accounts receivable 207,543 309,292 Income taxes
recoverable 1,793 - Inventory 6,711 7,734 Assets of discontinued
operations 541,148 497,036
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1,063,733 936,074 Property, plant and equipment, net of accumulated
depreciation 927,592 897,584 Intangibles, net of accumulated
amortization 511 498 Goodwill 266,827 266,827 Other assets 8,200
9,116 Assets of discontinued operations 1,742,143 1,741,950
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$ 4,009,006 $ 3,852,049
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Liabilities and Shareholders' Equity Current liabilities: Accounts
payable and accrued liabilities $ 92,513 $ 120,432 Income taxes
payable - 13,624 Liabilities of discontinued operations 234,511
244,727
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327,024 378,783 Long-term debt 719,240 718,850 Future income taxes
367,176 354,268 Future income taxes of discontinued operations
75,110 78,407 Shareholders' equity: Share capital 1,301,886
1,274,967 Contributed surplus 33,631 26,024 Cumulative translation
adjustment (21,113) (20,933) Retained earnings 1,206,052 1,041,683
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2,520,456 2,321,741
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$ 4,009,006 $ 3,852,049
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Common shares outstanding (000's) 122,762 121,580 Common share
purchase options outstanding (000's) 5,858 6,695 CONSOLIDATED
STATEMENTS OF CASH FLOW Three Months Ended Six Months Ended June
30, June 30, CDN $000's (unaudited) 2005 2004 2005 2004
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Cash provided by (used in): Continuing operations: Earnings from
continuing operations $ 9,308 $ 10,127 $ 97,589 $ 90,554 Items not
affecting cash: Stock-based compensation 2,684 1,414 5,464 2,943
Depreciation and amortization 11,804 11,779 33,173 35,721 Gain on
disposal of investments - (42) - (42) Future income taxes 3,733
(10,032) 12,908 12,908 Amortization of deferred financing costs 458
360 917 680 Unrealized foreign exchange gain on long-term monetary
items (14) (2,568) (3) (2,220)
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Funds provided by continuing operations 27,973 11,038 150,048
140,544 Changes in non-cash working capital balances 89,749 175,671
59,436 94,822
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117,722 186,709 209,484 235,366 Discontinued operations: Funds
provided by discontinued operations 59,633 27,709 142,547 74,801
Changes in non-cash working capital balances of discontinued
operations 28,880 (18,447) (48,264) (40,244)
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88,513 9,262 94,283 34,557 Investments: Business acquisitions -
(658,212) - (658,842) Purchase of property, plant and equipment
(88,490) (55,253) (161,450) (108,981) Purchase of intangibles - -
(20) - Proceeds on sale of property, plant and equipment 8,609
6,533 17,121 11,246 Proceeds on disposal of investments - 48 - 48
Proceeds on disposal of discontinued operations - 15,000 - 40,746
Investments - (1,340) - (1,340)
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(79,881) (693,224) (144,349) (717,123) Financing: Increase in
long-term debt - 520,873 - 522,136 Repayment of long-term debt (5)
(6,898) (9) (11,263) Deferred financing costs on long-term debt -
(4,985) - (4,985) Issuance of common shares on exercise of options
2,626 6,236 25,117 36,771 Change in bank indebtedness - 2,533 -
(76,114)
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2,621 517,759 25,108 466,545
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Increase in cash and cash equivalents 128,975 20,506 184,526 19,345
Cash and cash equivalents, beginning of period 177,563 20,209
122,012 21,370
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Cash and cash equivalents, end of period $ 306,538 $ 40,715 $
306,538 $ 40,715
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CANADIAN DRILLING OPERATING STATISTICS For the Six Months Ended
June 30, 2005 2004
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Market Precision Industry(x) Share % Precision Industry(x) Share %
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of drilling rigs 229 732 31.3 225 683 32.9 Number of operating days
(spud to release) 20,048 65,453 30.6 20,047 63,753 31.4 Wells
drilled 3,504 10,126 34.6 3,530 9,964 35.4 Average days per well
5.7 6.5 5.7 6.4 Metres drilled (000's) 3,936 11,698 33.6 3,799
10,882 34.9 Average metres/day 196 179 190 171 Average metres/well
1,123 1,155 1,076 1,092 Rig utilization rate (%) 48.4 50.4 48.9
51.6 (x) Excludes non-CAODC rigs. A conference call to review the
second quarter 2005 results has been scheduled for 12:00 noon MST
on Thursday, July 28, 2005. The conference call dial-in number is
1-800-814-4941. A live webcast will be accessible at
http://www.precisiondrilling.com/ by selecting Investor Relations.
DATASOURCE: Precision Drilling Corporation CONTACT: Hank B.
Swartout, Chairman, President and Chief Executive Officer, 4200,
150 6th Avenue S.W., Calgary, Alberta T2P 3Y7, Telephone: (403)
716-4500, Fax: (403) 264-0251; website:
http://www.precisiondrilling.com/.
Copyright