CALGARY, ALBERTA
This news release contains "forward-looking information and
statements" within the meaning of applicable securities laws. For a
full discussion 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 report.
Precision Drilling Trust ("Precision" or the "Trust") reported
net earnings of $89 million or $0.71 per unit for the fourth
quarter of 2007, a decrease of $38 million or 30% compared to $127
million or $1.01 per unit in the fourth quarter of 2006. For the
year ended December 31, 2007 Precision's net earnings were $346
million or $2.75 per unit, a decrease of $234 million or 40%
compared to $580 million or $4.62 per unit for the year ended
December 31, 2006. Fiscal 2007 results were impacted by the
Canadian decline in the drilling and service of natural gas wells
with partial offset by Precision's successful growth in the United
States land drilling market. For the fourth quarter of 2007, net
earnings benefited from a future income tax recovery of $20 million
associated with enacted Canadian federal income tax rate reductions
and was lowered by an asset write down charge of $7 million for
decommissioned rigs and a $5 million expense for salaried personnel
reductions. As a net result of these three items fourth quarter
2007 net earnings increased by $12 million or $0.10 per unit as
compared to nil in the fourth quarter of 2006. For fiscal 2006
future income tax recoveries were $21 million or $0.17 per
unit.
"Precision finished a challenging 2007 with very encouraging
results. I am especially pleased with the 2007 operating earnings
margin of 35% in light of the significantly reduced activity
levels, intense competition and continued labour challenges in
western Canada. Throughout the year, and especially the fourth
quarter, our people maintained a strong focus on reducing costs
while improving our safety performance and extending our reputation
as a high performance driller," said Kevin Neveu, Precision's Chief
Executive Officer.
Revenue in the fourth quarter was 24% lower than the prior year
at $249 million with revenue in the Contract Drilling Services
segment decreasing 22% and the Completion and Production Services
segment decreasing 28%.
For the quarter and year, geographic diversification continued
to mitigate lower activity and earnings in Canada. Precision has
grown its United States land drilling activity about ten-fold over
the prior year. In the fourth quarter of 2007 Precision
commissioned three new Super Single(TM) drilling rigs in Texas and
moved a triple rig from Canada to Wyoming. In December 2007
Precision mobilized a triple rig from Canada to Latin America and
commenced drilling in January 2008.
In December 2007, Precision announced an estimated 2008 capital
expenditure program of $370 million. The plan is comprised of $75
million for upgrade initiatives of existing equipment and
infrastructure and $295 million for expansion of its equipment
fleet. Most of this expansion capital will go towards the
construction of 19 new drilling rigs for the North American market.
The first three rigs in this program have been contracted with one
customer for work in the Rocky Mountain region of the United States
pursuant to a multi-year term with deployment expected to begin in
the fourth quarter of 2008.
Financial and Operating Highlights
(stated in
thousands of Three months ended Years ended
Canadian December 31, December 31,
dollars, except % %
per unit amounts) 2007 2006 Change 2007 2006 Change
----------------------------------------------------------------------------
Revenue $ 248,726 $ 328,049 (24) $1,009,201 $1,437,584 (30)
Operating
earnings(1) 77,696 132,396 (41) 356,351 595,279 (40)
Earnings from
continuing
operations 89,329 126,474 (29) 342,820 572,512 (40)
Net earnings 89,329 127,436 (30) 345,776 579,589 (40)
Cash provided by
continuing
operations 78,474 154,233 (49) 484,115 609,744 (21)
Net capital
spending 36,302 68,591 (47) 181,239 233,693 (22)
Distributions
declared in cash 69,166 116,912 (41) 246,485 447,001 (45)
Distributions
declared in-kind 30,182 24,523 23 30,182 24,523 23
Per unit
information:
Earnings from
continuing
operations 0.71 1.01 (30) 2.73 4.56 (40)
Net earnings 0.71 1.01 (30) 2.75 4.62 (40)
Distributions
declared in
cash 0.55 0.93 (41) 1.96 3.56 (45)
Distributions
declared in-
kind $ 0.24 $ 0.195 23 $ 0.24 $ 0.195 23
Drilling rig
operating days:
Canada 7,612 9,568 (20) 30,475 44,768 (32)
United States 818 81 910 1,850 170 988
Service rig
operating hours:
Canada 86,416 109,737 (21) 355,997 480,137 (26)
(1) Operating earnings is not a recognized measure under Canadian generally
accepted accounting principles ("GAAP"). Management believes that in
addition to net earnings, operating earnings is a useful supplemental
measure as it provides an indication of the results generated by
Precision's principal business activities prior to consideration of how
those activities are financed or how the results are taxed. Investors
are cautioned, however, that operating earnings should not be construed
as an alternative to net earnings determined in accordance with GAAP as
an indicator of Precision's performance. Precision's method of
calculating operating earnings may differ from other entities and,
accordingly, operating earnings may not be comparable to measures used
by other entities.
Precision's diversification in the United States continued
throughout 2007. At the start of 2007 Precision had one rig
operating and a firm commitment for a second. By the end of 2007
Precision was operating 12 rigs in the United States with
utilization greater than 95%, generating 8% of Precision's revenue
in the fourth quarter of 2007. This included five new Super
Single(TM) drilling rigs and six rigs deployed from Canada.
During the first quarter of 2008, Precision deployed a new Super
Triple from the 2007 build program to the Rocky Mountain region of
the United States and is negotiating a contract for another new
Super Triple rig for Canada in its place. Precision also made
arrangements to move a triple rig from Canada to the north eastern
United States for start up in the second quarter. These early 2008
moves, plus the announced contract with one customer for three new
Super Single(TM) rigs, demonstrate Precision's accelerating growth
in the United States. Precision's Latin American deployment is the
first step in developing the systems and skills necessary to
exploit international growth after the expiry of non-competition
terms from a 2005 business divestiture.
Precision's 2007 fourth quarter results for Canada reflected the
2007 theme of reduced drilling activity driven by bearish North
American natural gas prices, a strong Canadian dollar, record
industry rig capacity and unfavourable government royalty changes
on certain oil and natural gas production in Alberta. This resulted
in reduced equipment utilization and customer pricing. Fourth
quarter activity for Precision's drilling and service rigs was
about 20% below the fourth quarter of 2006 and about the same
activity level as the third quarter of 2007.
Average customer pricing for Precision's services in Canada
declined moderately, off 12% for drilling rigs and 10% for service
rigs, compared to the fourth quarter of 2006. Sequentially, average
drilling rig pricing increased 8% from the third quarter of 2007
while service rig pricing increased 2%, as winterization revenue
offset lower average rates.
A majority of the conventional demand for oilfield services in
Precision's Canadian market is dependant on natural gas well
fundamentals. In the fourth quarter of 2007, high North American
underground storage levels caused the bearish sentiment to persist
and kept commodity pricing at levels reasonably close to the prior
year period. In the quarter, average Canadian natural gas commodity
prices traded above $6.00 per MMBtu and average Henry Hub pricing
was almost US$7.00 per MMBtu. The one-year forward price for North
American natural gas showed stability as it traded within a range
of about $6.50 to $8.50 on Canadian and U.S. exchanges. The
weakness of the U.S. dollar undermined Canadian industry revenue
streams for many producers as the Canadian dollar appreciated 18%
in 2007.
In the quarter, oil commodity prices strengthened to record
levels. West Texas Intermediate crude oil averaged US$90.95 per
barrel compared to US$60.01 per barrel in the fourth quarter of
2006. This generated renewed interest in conventional oil plays and
reinforced unconventional production opportunities for many of
Precision's customers in heavy oil and oil sands regions. The
remaining three drilling rigs, all Super Singles(TM), from
Precision's 2007 new build program are for deployment in the
northern Alberta oil sands region during the second half of
2008.
Consistent with these trends, Precision took the following
action during the quarter to match equipment availability and
infrastructure support with market opportunity:
- 11 drilling rigs representing 5% of Precision's Canadian rig
fleet were permanently decommissioned with components transferred
into spare equipment;
- 16 service rigs representing 7% of the Precision's service rig
fleet were permanently decommissioned with components transferred
into spare equipment; and
- Precision reduced its management, administrative and
operational support workforce by about 15% and reorganized for
growth outside Canada.
These measures aligned Precision's cost infrastructure with
fundamentals and sharpened operational focus on high performing
assets.
Outlook
The bearish oilfield services demand that Precision and the
Canadian industry faced in 2007 is expected to persist through the
first half of 2008. Precision expects continued pressure on spot
market contract pricing and an extremely competitive seasonal
spring break-up. The consolidation steps taken in fourth quarter
2007, specifically, permanent fleet reductions and fixed expense
reductions were tailored to size Precision appropriately for this
level of competition. Precision will continue its focus on value
based high performance services where the customers recognize and
reward this superior performance.
The excess underground natural gas storage and resulting bearish
natural gas prices persistent for most of 2007 appear to be easing.
Strong natural gas consumption coupled with reduced Canadian
exports and volatile liquefied natural gas imports to the United
States may lead to strengthening economic fundamentals for drilling
later in 2008 with improved demand for drilling and other oilfield
services possible in late third or fourth quarter.
Precision will remain highly focused on United States expansion.
A clear delineation between under performing rigs and high
performance, highly mobile, well designed rigs with exceptional
crews has emerged. This presents Precision with significant
opportunity to displace low performing rigs, especially in the
demanding high end of the rig market. These customer requirements
are characterized by fast moving drilling rigs for directional,
horizontal and environmentally sensitive drilling programs. A
greater proportion of wells drilled in North America are seeking
unconventional resource pools and due to the complexity of these
programs high performance drilling rigs and services are
needed.
"Our strong financial position, ability to control costs and
high performance operational platform positions us to continue
organic growth while remaining poised to pursue sector
consolidation. In addition, the August expiry of non-compete
provisions will launch global oil and gas service expansion for
Precision," said Kevin Neveu, Precision's Chief Executive
Officer.
Capital Expenditure Initiatives
During the fourth quarter Precision announced its intention to
initiate record capital spending in 2008 of $370 million up almost
100% from 2007. The capital program targets rapidly growing high
performance drilling requirements in North American markets for
directional, horizontal and environmentally sensitive drilling
programs. The capital program will focus on Precision's high
performance Super series of drilling rigs, the Super Single(TM),
Super Double and Super Triple. These drilling rigs combine high
mobility, automation, advanced control systems and minimal
environmental impact with highly trained crews. High performance
drilling rigs enable customers to significantly improve drilling
economics by safely drilling and completing complex oil and gas
wells considerably faster. High performance drilling rigs are
highly valued by customers and achieve favourable day rates and
terms as compared to traditional rigs.
Actual 2007 capital spending was $187 million compared to the
third quarter estimate of approximately $220 million. The reduction
from estimate was the result of spending cuts and deferrals of both
expansion and upgrade capital in response to the operating
environment. The 2007 capital spending included $46 million for
maintenance and upgrade of existing assets and $141 million for
expansionary initiatives compared to $92 million and $171 million
respectively in 2006.
In the fourth quarter of 2007, capital expenditures were $38
million, a decrease of $35 million over the same period in 2006.
Capital spending for the quarter included $9 million in upgrade and
$29 million in expansion initiatives.
Financial Position
The Trust's liquidity and solvency position remained strong as
working capital exceeded long-term debt by $21 million as at
December 31, 2007 compared to $26 million as at December 31, 2006.
The Trust's financial position has been sustained despite a
decrease in activity as a significant percentage of operating costs
are variable in nature and the Trust curtailed spending and
distributions in line with financial performance.
The fourth quarter of 2007 was further highlighted by the
following financial developments:
- The Trust declared monthly cash distributions to unitholders
of $0.13 per unit for quarterly cash distributions declared of $49
million or $0.39 per unit. In addition the Trust declared a special
year-end distribution of $50 million or $0.40 per unit settled
$0.24 per unit in-kind and $0.16 per unit in cash. Settlement
in-kind essentially means that unitholders did not receive cash or
additional units. Immediately after the in-kind special year-end
distribution, the outstanding units of the Trust were consolidated
so that the number remained unchanged from the number outstanding
prior to the in-kind special year-end distribution;
- Long-term debt decreased by $21 million to $120 million for a
long-term debt to long-term debt plus equity ratio of 0.08 at
December 31, 2007 compared to 0.10 at the end of 2006; and
- Working capital decreased by $26 million to $140 million for a
working capital ratio of 2.1 at December 31, 2007 compared to 1.8
at the end of 2006.
Results of Operations
Precision's operations are reported in two segments. The
Contract Drilling Services segment includes the drilling rig, camp
and catering, oilfield supply, and manufacturing divisions. The
Completion and Production Services segment includes the service
rig, snubbing, rental, and wastewater treatment divisions. The
following table contains financial and operating statistics for
Precision's drilling and service rigs in Canada.
Three months ended December 31, 2007 2006 % Change
----------------------------------------------------------------------------
Contract Drilling Services:
Number of drilling rigs (end of period) 232 240 (3)
Drilling operating days (spud to release) 7,612 9,568 (20)
Drilling revenue per operating day $ 18,554 $ 21,155 (12)
Drilling rig operating day utilization 34% 43%
Completion and Production Services:
Number of service rigs (end of period) 223 237 (6)
Service rig operating hours 86,416 109,737 (21)
Service revenue per operating hour $ 694 $ 771 (10)
Service rig operating hour utilization 39% 50%
----------------------------------------------------------------------------
In the Contract Drilling segment, revenue for the quarter
decreased by 22% to $175 million while operating earnings decreased
by 33% to $69 million compared to the same period in 2006.
Operating earnings were 40% of revenue in the quarter and 41% in
2007, a decrease of seven and six percentage points respectively
over 2006. While Precision's drilling operating days in the United
States increased eleven-fold in 2007, Precision's annual drilling
rig activity in Canada declined by 32% with average operating day
rates for 2007 declining by 7% over 2006. The declines were
attributable to reduced customer demand and excess rig capacity
resulting in an increasingly competitive pricing environment.
During 2007 Precision successfully expanded its presence in the
United States land drilling market and these operations contributed
8% of revenue in the quarter and 5% for the year.
Average drilling rig operating day rates for Precision in Canada
held up in the quarter due to pricing for rigs under long-term
contracts for Precision's versatile, high performing rigs and
crews. More than 25% of the drilling operating days in Canada for
the quarter were from rigs under long-term customer arrangements.
Average pricing in Canada for the quarter was $18,554 per operating
day, a decrease of 12% from the same period in 2006.
Drilling rig operating days, spud to rig release, for Precision
in Canada in the fourth quarter of 2007 were 7,612, a decrease of
20% compared with 9,568 in the same quarter in 2006. Utilization
declined to 34% in the fourth quarter of 2007 compared with 43% a
year ago.
Demand for camp and catering services followed industry trends
and revenue in the quarter was 35% lower than the fourth quarter of
2006.
In the Completion and Production segment, revenue for the fourth
quarter decreased by 28% from 2006 to $78 million while operating
earnings decreased by 57% to $17 million compared to the same
period in 2006. Operating earnings were 22% of revenue in the
quarter and 31% in 2007, a decrease of fifteen and six percentage
points respectively over 2006. The declines are attributable to
reduced customer demand for natural gas production work and well
completions resulting in hourly rate reductions that began during
the third quarter of 2007. As a percentage of revenue, the
operating earnings margin in the quarter was reduced by seven
percentage points for charges associated with asset decommissioning
and staff reductions.
Service rig activity in the quarter declined 21% from prior
year, with the fleet generating 86,416 operating hours compared
with 109,737 hours for the same quarter in 2006. Utilization fell
to 39% in the quarter compared to 50% a year ago. The reduction was
a result of lower demand as customers scaled back well completion
work in line with drilling activity and moderated spending on
production maintenance of existing wells, particularly natural gas
wells. New well completions accounted for 33% of service rig
operating hours in the fourth quarter compared to 39% in 2006.
Lower customer demand and the resulting competitive bidding
environment led to a price reduction of 10% compared to the prior
year.
Demand for rental equipment followed industry trends and revenue
in the quarter was 25% lower than the fourth quarter of 2006 while
revenue for the snubbing division was down 27% and the wastewater
treatment division was lower by 1%.
Overall, operating expenses increased from 47% of revenue in the
fourth quarter of 2006 to 51% in 2007 due to lower customer pricing
and fixed overhead costs. Operating costs remained highly variable
to activity levels and, in the quarter, service rig costs per hour
were unchanged while drilling rig costs per day were lower by
7%.
General and administrative expense for the fourth quarter was
$19 million, a decrease of $4 million from the same period in 2006.
This decrease was due primarily to lower employee incentive
compensation costs offset by charges associated with workforce
reductions in early November 2007.
Depreciation and amortization expense in the fourth quarter of
2007 was $25 million, which included a charge of $7 million for
decommissioned assets, compared with $18 million in the same period
of 2006. Although Canadian rig utilization in the quarter was lower
by about 20% compared to 2006 the utilization impact was offset by
a higher cost base for active rigs.
Net interest expense in the fourth quarter of 2007 was $2
million and in line with the prior year.
The Trust's effective income tax rate on earnings before income
taxes for fiscal 2007 was 8%, before enacted tax rate reductions,
compared to 6% for 2006. Compared to a corporate income tax rate,
the low effective income tax rate is primarily the result of the
income trust structure shifting all or a portion of the income tax
burden of the Trust to its unitholders.
During the fourth quarter of 2007 the Government of Canada
enacted legislation reducing the federal income tax rates to 15% by
2012. The enacted tax rate reductions resulted in a $20 million
future income tax recovery in the fourth quarter of 2007.
Distribution Policy of the Trust
Upon Precision's conversion to an income trust effective
November 7, 2005 the Trust adopted a policy of making monthly
distributions to holders of Trust units and holders of exchangeable
LP units. Precision has a legal entity structure whereby the trust
entity, Precision Drilling Trust, effectively must flow its taxable
income to unitholders pursuant to its Declaration of Trust.
Distributions, including special distributions, may be declared
in cash or in-kind or a combination of both and reduced, increased
or suspended entirely depending on the operations of Precision, the
performance of its assets, or legislative changes in tax laws by
governments in Canada.
For the year ended December 31, 2007 the Trust generated cash
from continuing operations of $484 million and received proceeds
related to the disposal of operations discontinued in previous
periods of $3 million. The cash was used to repay long-term debt of
$21 million and bank indebtedness of $23 million, purchase
property, plant and equipment net of disposal proceeds and related
non-cash working capital of $194 million and make cash
distributions to unitholders of $249 million.
The Canadian drilling industry is subject to seasonality with
activity and earnings peaking during the winter months in the
fourth and first quarters. As temperatures rise in the spring, the
ground thaws and becomes unstable. Government road bans can
restrict activity at any time but are typical for spring break-up
during the second quarter before equipment is able to move for
summer drilling programs.
As a result, in combination with economic cycles, Precision's
operating and financial results can vary significantly by quarter.
Working capital is typically at its highest level following the
first quarter when accounts receivable increases from winter
activity and tends to be at its lowest during the second quarter.
The change in the non-cash working capital balance has a direct
impact on cash provided by operations.
Cautionary Statement Regarding Forward-Looking Information and
Statements
Certain statements contained in this news release, including
statements related to Precision's upgrade and expansion capital
expenditures including the 2008 capital expenditure program,
organic growth opportunities, outlook for future natural gas
prices, cyclical industry fundamentals, future natural gas supply
growth and storage levels, drilling activity in Canada and the
United States, expansion in the United States and statements that
contain words such as "could", "should", "can", "anticipate",
"expect", "believe", "will", "may", "likely" 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 United
States Private Securities Litigation Reform Act of 1995.
In particular, forward-looking information and statements
include: that bearish oilfield demand is expected to persist
through the first half of 2008; that Precision expects continued
pressure on spot market contract pricing and an extremely
competitive spring break-up; that bearish natural gas prices
persistent for most of 2007 appear to be easing; that strong
natural gas consumption coupled with reduced Canadian exports and
volatile liquefied natural gas imports to the United States may
lead to strengthening economic fundamentals later in 2008 with
improved demand for drilling and other oilfield services possible
in the late third or fourth quarter; the expiry of non-compete
provisions will launch global expansion for Precision, all of which
are stated under the heading "Outlook" of this news release.
These statements are based on certain assumptions and analysis
made by the Trust in light of its experience and its perception of
historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate
in the circumstances. However, whether actual results, performance
or achievements will conform to the Trust's expectations and
predictions is subject to a number of known and unknown risks and
uncertainties which could cause actual results to differ materially
from the Trust's 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 well servicing, contract drilling
and ancillary oilfield services; the effects of weather conditions
on operations and facilities; the existence of competitive
operating risks inherent in well servicing, contract drilling and
ancillary oilfield services; general economic, market or business
conditions; changes in laws or regulations, including taxation,
environmental and currency regulations; the lack of availability of
qualified personnel or management; and other unforeseen conditions
which could impact on the use of services supplied by
Precision.
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 the Trust will be realized or, even if
substantially realized, that they will have the expected
consequences to or effects on the Trust or its business or
operations. Except as may be required by law, the Trust assumes no
obligation to update publicly any such forward-looking information
and statements, whether as a result of new information, future
events or otherwise.
CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT (UNAUDITED)
(Stated in
thousands of
Canadian dollars,
except per unit Three months ended Years ended
amounts) December 31, December 31,
2007 2006 2007 2006
----------------------------------------------------------------------------
Revenue $ 248,726 $ 328,049 $1,009,201 $1,437,584
Expenses:
Operating 126,835 155,733 516,094 688,207
General and
administrative 18,540 22,250 56,032 81,217
Depreciation and
amortization 25,281 17,910 78,326 73,234
Foreign exchange 374 (240) 2,398 (353)
----------------------------------------------------------------------------
171,030 195,653 652,850 842,305
----------------------------------------------------------------------------
Operating
earnings 77,696 132,396 356,351 595,279
Interest:
Long-term debt 1,965 2,644 7,767 8,800
Other 23 171 106 171
Income (276) (942) (555) (942)
Other - - - (408)
----------------------------------------------------------------------------
Earnings from
continuing
operations
before income
taxes 75,984 130,523 349,033 587,658
Income taxes:
Current 2,913 4,676 (737) 34,526
Future (16,258) (627) 6,950 (19,380)
----------------------------------------------------------------------------
(13,345) 4,049 6,213 15,146
----------------------------------------------------------------------------
Earnings from
continuing
operations 89,329 126,474 342,820 572,512
Gain on disposal
of discontinued
operations,
net of tax - 962 2,956 7,077
----------------------------------------------------------------------------
Net earnings 89,329 127,436 345,776 579,589
Deficit,
beginning of
period (116,091) (181,220) (195,219) (303,284)
Distributions
declared (99,348) (141,435) (276,667) (471,524)
----------------------------------------------------------------------------
Deficit, end of
period $ (126,110) $ (195,219) $ (126,110) $ (195,219)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per
unit from
continuing
operations:
Basic and
diluted $ 0.71 $ 1.01 $ 2.73 $ 4.56
----------------------------------------------------------------------------
Earnings per
unit:
Basic and
diluted $ 0.71 $ 1.01 $ 2.75 $ 4.62
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Units
outstanding
(000s) 125,758 125,758 125,758 125,758
Weighted average
units
outstanding
(000s) 125,758 125,687 125,758 125,545
Diluted units
outstanding
(000s) 125,766 125,687 125,760 125,545
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, December 31,
(Stated in thousands of Canadian dollars) 2007 2006
----------------------------------------------------------------------------
ASSETS
Current assets:
Accounts receivable $ 256,616 $ 354,671
Income tax recoverable 5,952 8,701
Inventory 9,255 9,073
----------------------------------------------------------------------------
271,823 372,445
Property, plant and equipment, net of
accumulated depreciation 1,210,587 1,107,617
Intangibles, net of accumulated
amortization 318 375
Goodwill 280,749 280,749
----------------------------------------------------------------------------
$ 1,763,477 $ 1,761,186
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 14,115 $ 36,774
Accounts payable and accrued liabilities 80,864 130,202
Distributions payable 36,470 38,985
---------------------------------------------------------------------------
131,449 205,961
Long-term compensation plans 13,896 22,699
Long-term debt 119,826 140,880
Future income taxes 181,633 174,571
---------------------------------------------------------------------------
446,804 544,111
---------------------------------------------------------------------------
Unitholders' equity:
Unitholders' capital 1,442,476 1,412,294
Contributed surplus 307 -
Deficit (126,110) (195,219)
---------------------------------------------------------------------------
1,316,673 1,217,075
---------------------------------------------------------------------------
$ 1,763,477 $ 1,761,186
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Units outstanding (000s) 125,758 125,758
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(Stated in thousands of Three months ended Years ended
Canadian December 31, December 31,
dollars)
2007 2006 2007 2006
----------------------------------------------------------------------------
Cash provided by (used in):
Continuing operations:
Earnings from continuing
operations $ 89,329 $ 126,474 $ 342,820 $ 572,512
Adjustments and other items
not involving cash:
Long-term compensation plans 1,817 10,192 (8,496) 22,699
Depreciation and amortization 25,281 17,910 78,326 73,234
Future income taxes (16,258) (627) 6,950 (19,380)
Other 104 (3) 112 (408)
Changes in non-cash working
capital balances (21,799) 287 64,403 (38,913)
----------------------------------------------------------------------------
78,474 154,233 484,115 609,744
Investments:
Purchase of property, plant
and equipment (37,505) (72,333) (186,973) (263,030)
Proceeds on sale of property,
plant and equipment 1,236 3,742 5,767 29,337
Proceeds on disposal of
discontinued operations - - 2,956 7,337
Business acquisitions, net of
cash acquired - (25) - (16,428)
Proceeds on disposal of
investments - - - 510
Purchase of intangibles (33) - (33) -
Changes in non-cash working
capital balances (3,411) (3,080) (13,119) 7,551
----------------------------------------------------------------------------
(39,713) (71,696) (191,402) (234,723)
Financing:
Distributions paid (49,045) (116,867) (249,000) (444,651)
Repayment of long-term debt (3,947) (24,691) (99,700) (204,910)
Increase in long-term debt - - 78,646 248,338
Issuance of Trust units - 4,174 - 9,896
Changes in non-cash working
capital balances - 22,060 - -
Change in bank indebtedness 14,115 32,787 (22,659) 16,306
----------------------------------------------------------------------------
(38,877) (82,537) (292,713) (375,021)
----------------------------------------------------------------------------
Increase in cash and cash
equivalents (116) - - -
Cash and cash equivalents,
beginning of period 116 - - -
----------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ - $ - $ - $ -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SEGMENT INFORMATION
Three months Completion
ended Contract and Inter-
December 31, Drilling Production Corporate segment
2007 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 174,548 $ 77,717 $ - $ (3,539) $ 248,726
Operating
earnings 69,129 17,289 (8,722) - 77,696
Depreciation
and
amortization 13,908 10,448 925 - 25,281
Total assets 1,282,865 457,587 23,025 - 1,763,477
Goodwill 172,440 108,309 - - 280,749
Capital
expenditures
(1) 31,835 5,442 261 - 37,538
----------------------------------------------------------------------------
Three months Completion
ended Contract and Inter-
December 31, Drilling Production Corporate segment
2006 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 223,162 $ 107,915 $ - $ (3,028) $ 328,049
Operating
earnings 103,916 39,755 (11,275) - 132,396
Depreciation
and
amortization 9,163 7,874 873 - 17,910
Total assets 1,198,284 507,510 55,392 - 1,761,186
Goodwill 172,440 108,309 - - 280,749
Capital
expenditures
(1) 62,954 8,979 400 - 72,333
----------------------------------------------------------------------------
Completion
Year ended Contract and Inter-
December 31, Drilling Production Corporate segment
2007 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 694,340 $ 327,471 $ - $ (12,610) $1,009,201
Operating
earnings 284,754 100,596 (28,999) - 356,351
Depreciation
and
amortization 43,120 31,421 3,785 - 78,326
Total assets 1,282,865 457,587 23,025 - 1,763,477
Goodwill 172,440 108,309 - - 280,749
Capital
expenditures 159,004 26,772 1,230 - 187,006
----------------------------------------------------------------------------
Completion
Year ended Contract and Inter-
December 31, Drilling Production Corporate segment
2006 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 1,009,821 $ 441,017 $ - $ (13,254) $1,437,584
Operating
earnings 473,624 163,119 (41,464) - 595,279
Depreciation
and
amortization 38,573 32,013 2,648 - 73,234
Total assets 1,198,284 507,510 55,392 - 1,761,186
Goodwill 172,440 108,309 - - 280,749
Capital
expenditures
(1) 220,397 39,273 3,360 - 263,030
----------------------------------------------------------------------------
(1) excludes business acquisitions
CANADIAN DRILLING OPERATING STATISTICS
Three months ended December 31,
2007 2006
-------------------------------------------------------------
Market Market
Precision Industry(1) Share% Precision Industry(1) Share%
-------------------------------------------------------------
Number of
drilling rigs
(end of period) 232 898 26 240 832 29
Number of
operating days
(spud to release) 7,612 30,841 25 9,568 35,682 27
Wells drilled 1,124 5,216 22 1,299 5,339 24
Average days per
well 6.8 5.9 7.4 6.7
Metres drilled
(000s) 1,508 6,216 24 1,672 6,571 25
Average metres
per day 198 202 175 184
Average metres
per well 1,341 1,192 1,287 1,231
Rig utilization
rate 34% 37% 43% 47%
Years ended December 31,
2007 2006
-------------------------------------------------------------
Market Market
Precision Industry(1) Share% Precision Industry(1) Share%
-------------------------------------------------------------
Number of
drilling rigs
(end of period) 232 898 26 240 832 29
Number of
operating days
(spud to release) 30,475 120,961 25 44,768 158,416 28
Wells drilled 4,718 18,342 26 6,180 22,575 27
Average days per
well 6.5 6.6 7.2 7.0
Metres drilled
(000s) 5,813 22,189 26 7,810 27,373 29
Average metres
per day 191 183 174 173
Average metres
per well 1,232 1,210 1,264 1,213
Rig utilization
rate 34% 38% 52% 55%
(1) Excludes non Canadian Association of Oilwell Drilling Contractors
("CAODC") rigs and non-reporting CAODC members and has been compiled
with estimates by Precision.
FOURTH QUARTER 2007 EARNINGS CONFERENCE CALL AND WEBCAST
Precision Drilling Trust ("Precision") has scheduled a
conference call and webcast to begin promptly at 12:00 Noon MT
(2:00 p.m. ET) on Thursday, February 14, 2008.
The conference call dial in numbers are 1-866-223-7781 or
416-641-6103
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
February 21, 2008 by dialing 1-800-408-3053 or 416-695-5800,
passcode 3249512#.
Precision is a leading provider of safe, high performance energy
services to the North American oil and gas industry. Precision
provides customers with access to an extensive fleet of contract
drilling rigs, service rigs, camps, snubbing units, wastewater
treatment units and rental equipment backed by a comprehensive mix
of technical support services and skilled, experienced
personnel.
Precision Drilling Trust is listed on the Toronto Stock Exchange
under the trading symbol "PD.UN" and on the New York Stock Exchange
under the trading symbol "PDS".
Contacts: Doug Strong, Chief Financial Officer of Precision
Drilling Corporation, Administrator of the Trust (403) 716-4500
(403) 264-0251 (FAX) Precision Drilling Trust 4200, 150 - 6th
Avenue S.W. Calgary, AB T2P 3Y7 Website:
www.precisiondrilling.com
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