Precision Drilling Corporation
(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.
Precision Drilling Corporation ("Precision" or the
"Corporation") reported net earnings of $61 million or $0.21 per
diluted share for the three months ended September 30, 2010
compared to net earnings of $72 million or $0.25 per diluted share
for the third quarter of 2009. The results for the third quarter of
2010 include a foreign exchange gain of $18 million while the third
quarter of 2009 included a foreign exchange gain of $63
million.
Revenue for the third quarter of 2010 totaled $359 million
compared to $253 million for the same period of 2009. The increase
in drilling activity both in Canada and in the United States in the
third quarter of 2010 over the same period of 2009 led to the 42%
increase in revenue. Earnings before interest, taxes, depreciation
and amortization and foreign exchange ("EBITDA") were $113 million
for the third quarter of 2010 compared to EBITDA of $86 million for
the third quarter of 2009. EBITDA is not a recognized financial
measure under Generally Accepted Accounting Principles ("GAAP") see
"Non-GAAP Measures" in this report. The increase in EBITDA between
the two years is due to the increase in drilling activity.
Revenue for the second quarter of 2010 was $262 million and
EBITDA totaled $59 million. Third quarter 2010 revenue and EBITDA
were higher than the second quarter of 2010 due to the seasonality
of oilfield service activity in Canada known as "spring break-up"
that takes place during the second quarter. This is a time in
Canada in which drilling rigs cannot change locations due to road
conditions and normally occurs in March to June of each year.
For the nine months ended September 30, 2010, Precision reported
net earnings of $57 million or $0.20 per diluted share compared to
net earnings of $187 million or $0.75 per diluted share for the
same period of 2009. Revenue for the nine months ended September
30, 2010 was $994 million compared to $911 million for the
corresponding period of 2009. EBITDA totaled $290 million for the
nine months ended September 30, 2010 compared to $314 million for
the same period of 2009. Higher activity levels in 2010 were offset
by lower average drilling revenue per day in the Corporation's
operating areas. Results for the nine months ended September 30,
2010 include a foreign exchange gain of $12 million as compared to
a foreign exchange gain of $105 million for the same period of
2009.
Kevin Neveu, Precision's President and Chief Executive Officer,
stated: "The strong customer demand for high performance rigs
targeting oil has led the rig count higher and continues to provide
an encouraging outlook for Precision. Approximately 60% of
Precision's rigs working today are drilling for oil or natural gas
liquids targets and approximately 80% are drilling complex
horizontal or directional wells."
"The third quarter of 2010 was the second consecutive quarter
which Precision realized improved average revenue per day over the
previous quarter in the United States. This confirms our previously
stated view that the second quarter of 2010 represented the bottom
of Precision's average dayrate for this cycle. In addition, third
quarter EBITDA increased by 31% from prior year levels. These
improvements are being driven by high customer demand for
Precision's Tier 1 and 2 rigs in both the United States and Canada
and from the re-establishment of oil drilling demand."
"In the United States, oil related activity has continued to
strengthen. Precision's average active rig count in the United
States for the third quarter of 2010 was up 5% over the second
quarter of the year and 76% over the same period in 2009.
Precision's active rig count in the United States is currently 99
and we expect it to stay at this level or increase modestly over
the coming months. If low natural gas prices persist, there is the
potential for further regional pullback in gas related activity;
however, we would expect most of these rigs to be absorbed by oil
and natural gas liquids rich drilling activity. As demand for Tier
1-Super Series and Tier 2 rigs remains strong, dayrates in the
United States markets are continuing to modestly improve from
previous quarters."
"Higher than normal rainfall through much of the Western Canada
Sedimentary Basin during the third quarter hampered drilling
activity. Over the past few weeks, Precision has reactivated
approximately 30 rigs sidelined due to poor weather conditions.
Precision's current active rig count in Canada is at 119 and,
despite the wet weather, the average rig count of 82 for the third
quarter of 2010 was 62% higher than the comparable quarter of 2009.
Most of this increase is driven by unconventional horizontal
drilling and completion techniques being applied to conventional
oil reservoirs in Western Canada and we believe that the remainder
of 2010 activity levels will exceed those achieved in 2009. While
in early discussions with customers, the Canadian 2011 winter
drilling season is expected to be at least as busy as winter 2010.
We would expect there to be higher market dayrates because of this
level of anticipated customer demand."
"Precision has seized market opportunities during 2010 which
includes the contracting and construction of nine new rigs that
were announced last quarter. Five of these new-rig builds are Super
Singles of which two have been delivered on time and on budget in
Canada. Of the remaining three Super Single rigs, two are expected
to be deployed in the United States and one in Canada. The other
four new-rig builds are Super Triple rigs with all four expected to
work in the United States. All nine rigs have been contracted with
an average contract term of approximately three years."
"Looking forward to 2011, Precision is going to continue its
high-value focused organic growth program as we believe there will
be ample opportunities for new-build Super Series rigs which will
continue to provide the High Performance High Value service that
meets and exceeds customer requirements. Precision's balance sheet
is solid and provides the financial flexibility to capitalize on
potential opportunities as Precision looks toward expanding its
drilling, directional drilling and international presence during
2011", concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING INFORMATION
(stated in
thousands of
Canadian
dollars, Three months ended Nine months ended
except per September 30, September 30,
share/ unit 2010 2009 % 2010 2009 %
amounts) Change Change
----------------------------------------------------------------------------
Revenue $ 359,152 $ 253,337 41.8 $ 994,116 $ 911,379 9.1
EBITDA(1) 112,597 85,739 31.3 289,994 314,386 (7.8)
Net earnings 61,078 71,696 (14.8) 56,548 186,588 (69.7)
Cash
provided by
operations 67,575 19,948 238.8 230,203 434,098 (47.0)
Capital
spending:
Upgrade
capital
expenditures 29,323 4,020 629.4 50,714 21,820 132.4
Expansion capital
expenditures 6,463 10,178 (36.5) 14,239 157,623 (91.0)
Proceeds on sale (2,072) (2,428) (14.7) (9,371) (10,257) (8.6)
-----------------------------------------------------------
Net capital
spending 33,714 11,770 186.4 55,582 169,186 (67.1)
Distributions
declared - - - - 6,408 (100.0)
Net earnings -
per
share/unit:
Basic 0.22 0.26 (15.4) 0.21 0.77 (72.7)
Diluted 0.21 0.25 (16.0) 0.20 0.75 (73.3)
Distributions
declared per
share/unit $ - $ - $ - $ 0.04 (100.0)
Contract drilling
rig fleet 353 390 (9.5) 353 390 (9.5)
Drilling rig
utilization days:
Canada 7,557 4,653 62.4 21,446 14,634 46.5
United States 8,512 4,835 76.0 23,535 16,773 40.3
International 145 176 (17.6) 480 538 (10.8)
Service rig
fleet 200 229 (12.7) 200 229 (12.7)
Service rig
operating hours 70,265 49,581 41.7 195,277 147,253 32.6
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".
FINANCIAL POSITION AND RATIOS
(Stated in thousands of
Canadian dollars, except September 30, December 31, September 30,
ratios) 2010 2009 2009
----------------------------------------------------------------------------
Working capital $ 392,057 $ 320,860 $ 279,201
Working capital ratio 3.4 3.5 2.5
Long-term debt(1) $ 679,291 $ 748,725 $ 795,560
Total long-term financial
liabilities $ 704,802 $ 775,418 $ 822,554
Total assets $ 4,188,496 $ 4,191,713 $ 4,360,861
Long-term debt to long-term
debt plus equity ratio(1) 0.21 0.22 0.23
----------------------------------------------------------------------------
(1) Excludes current portion of long-term debt and is net of unamortized
debt issue costs.
Revenue in the third quarter of 2010 was 42% higher than the
prior year period. The increase was due to a year-over-year
increase in utilization days both in Canada and the United States.
The mix of drilling rigs working under term contracts and
well-to-well contracts moved average pricing slightly higher in the
United States during the quarter over the previous quarter. Revenue
in Precision's Contract Drilling Services segment increased by 41%
while revenue increased 43% in the Canadian based Completion and
Production Services segment in the third quarter of 2010 compared
to the prior year quarter.
EBITDA margin was 31% for the third quarter of 2010 compared to
34% for the same period in 2009. The three percentage point decline
in EBITDA margin was primarily attributable to fewer idle but
contracted rig days in the third quarter of 2010 versus the prior
year period and a lower term contract mix. Precision's term
contract position with customers, a highly variable operating cost
structure and economies achieved through vertical integration of
the supply chain continue to support EBITDA margins.
In the Contract Drilling Services segment, Precision currently
owns 353 contract drilling rigs, including 202 in Canada, 148 in
the United States and three rigs in international locations and 84
drilling rig camps. Precision's Completion and Production Services
segment includes 200 service rigs, 20 snubbing units, 79 water
treatment units and a broad mix of rental equipment.
During the quarter an average of 82 drilling rigs worked in
Canada and 94 in the United States and Mexico totaling an average
of 176 rigs working. This compares with an average of 130 rigs
working in the second quarter of 2010 and 106 rigs in the third
quarter a year ago.
Precision's priorities for 2010 are threefold. The first is to
continue to deliver the High Performance High Value level of
services that customers require to drill the technically
challenging wells of today's unconventional resource play
exploitation. Second, Precision continues to improve its balance
sheet, which provides financial flexibility and liquidity to be
able to seize market opportunities, our third priority. To that
end, during 2010 Precision has repaid its debt by $104 million and
reduced the overall effective interest rate on its debt to
approximately 7%. Additionally, Precision's 2010 new rig build
program currently stands at nine rigs. From the previously
announced capital expenditure plan of $189 million, Precision is
planning an additional $29 million for 2010 for North American and
international rig and asset upgrades to meet customers' needs.
Total capital spending for 2010 is now estimated at $218 million
with an additional $82 million to be spent in 2011 for the new-rig
builds.
Drilling in Canada for 2010 to date is outpacing the drilling
activity of 2009 because of oil related drilling activity. In the
United States, the industry and Precision have experienced
improving utilization as customer spending has increased due
principally to higher oil prices.
Oil and natural gas prices during the third quarter of 2010 were
higher than a year ago. For the third quarter of 2010 AECO natural
gas spot prices averaged $4.21 per MMBtu, 44% higher than the third
quarter 2009 average of $2.93 per MMBtu. In the United States,
Henry Hub natural gas spot prices averaged US$4.28 per MMBtu in the
third quarter of 2010, an increase of 36% over the third quarter
2009 average of US$3.15 per MMBtu. West Texas Intermediate crude
oil averaged US$75.97 per barrel during the quarter, 11% higher
when compared to US$68.18 per barrel in the same period in
2009.
Summary for the three months ended September 30, 2010:
- Precision continues to have a strong balance sheet. As at
September 30, 2010, Precision had a debt to capitalization ratio of
0.21, a cash balance of $209 million and, in combination with $436
million availability under its revolving credit facility and demand
operating lines, continued to carry ample liquidity.
- Operating earnings were $65 million and 18% of revenue,
compared to $55 million and 22% of revenue in 2009. Operating
earnings were positively impacted by the increase in activity in
most of Precision's service offerings over the same period in
2009.
- Financial charges were $22 million, a decrease of $8 million
due to the reduction in long-term debt over the prior year
period.
- The majority of Precision's credit facilities are denominated
in U.S. dollars. During the quarter, the Canadian dollar
strengthened in relation to the U.S. dollar giving rise to
unrealized translation gains which accounted for most of the $18
million foreign exchange gain recognized in the quarter compared to
a $67 million gain in 2009.
- Capital expenditures for the purchase of property, plant and
equipment were $36 million in the third quarter, an increase of $22
million over the same period in 2009. Capital spending for the
third quarter of 2010 included $7 million on expansionary capital
initiatives and $29 million on the maintenance and upgrade of
existing assets.
- Average revenue per utilization day for contract drilling rigs
decreased in the third quarter of 2010 to US$18,914 from the prior
year third quarter of US$22,497 in the United States and decreased
in Canada from $18,195 in the third quarter of 2009 to $15,686 for
the third quarter of 2010. The decrease in revenue rates for the
third quarter in the United States reflects the greater proportion
of rigs working under well-to-well contracts compared to the prior
year and idle but contracted revenue in 2009. In the United States,
for the third quarter of 2010 57% of Precision's working rigs were
working under contract compared to 82% in the 2009 comparative
period. These figures also include US$1 million in revenue
generated from idle but contracted rigs associated with term
customer contracts, a reduction of US$8 million compared to the
prior year third quarter. Turnkey revenue for the third quarter of
2010 was US$15 million generated from 183 utilization days compared
with US$6 million from 117 days in 2009. In Canada, contract
drilling rates are down from the prior year comparative period due
to a higher proportion of rig activity being derived from the
competitive spot market and the receipt of idle but contracted
revenue in 2009 of $9 million compared to $2 million in the current
year. Within Precision's Completion and Production Services
segment, average hourly rates for service rigs were $595 in the
third quarter of 2010 compared to $614 in the third quarter of
2009.
- Average operating costs per day for drilling rigs decreased in
the third quarter of 2010 to US$12,391 from the prior year third
quarter of US$12,692 in the United States and from $8,802 to $8,303
in Canada. The cost decrease in Canada was primarily due to rig mix
with a higher percentage of spot market work for the double and
single rigs which are lower cost rigs. In the United States, the
decrease was due to lower labour costs and lower ad valorem taxes
partially offset by higher repairs and maintenance as drilling rigs
are put back into service. Within Precision's Completion and
Production Services segment, average hourly operating costs for
service rigs were $434 in the third quarter of 2010 as compared to
$438 in the third quarter of 2009.
Summary for the nine months ended September 30, 2010:
- Revenue was $994 million, an increase of $83 million or 9%
from the prior year due to higher activity in both of Precision's
business segments.
- Operating earnings were $158 million, a decrease of $54
million or 26% from 2009. Operating earnings were 16% of revenue,
compared to 23% in 2009.
- Capital expenditures for the purchase of property, plant and
equipment were $65 million in 2010, a decrease of $114 million over
the same period in 2009, and included $14 million on expansionary
capital initiatives and $51 million on the maintenance and upgrade
of existing assets. During the first nine months of 2009, 16
newly-built Super Series drilling rigs were added to the fleet
under long-term customer contracts, seven in Canada and nine in the
United States.
- Financial charges were $103 million, a decrease of $10 million
from the prior year, as reduced interest charges were offset by
increased amortization of deferred financing costs from the
repayment of debt. Total debt has been reduced by $104 million year
to date in 2010.
- During the first nine months of the year Precision recorded a
foreign exchange gain of $12 million compared to a $105 million
gain in 2009. A significant component of these results relates to
the translation of Precision's U.S. dollar denominated credit
facilities.
- General and administrative costs were $73 million which was
in-line with the prior year.
OUTLOOK
Precision has a strong portfolio of long-term customer contracts
that provides a base level of activity and revenue for the
Corporation. Precision expects to have an average of approximately
96 rigs committed under term contracts in North America in the
fourth quarter of 2010 and an average of 82 rigs contracted for the
first quarter of 2011. In Canada, term contracted rigs generate
from 200 to 250 utilization days per rig year due to the seasonal
nature of well access whereas in the United States they generate
about 350 utilization days per rig year in most regions.
For all of 2010, Precision expects to have an average of
approximately 88 rigs under term contract, of which 49 are rigs
contracted in the United States, 37 in Canada and two in Mexico.
For 2011, based on the current position, Precision expects to have
an average of 32 rigs in Canada under term contract, 31 in the
United States and two in Mexico, for an average of 65 for the full
year. Since July 22, 2010, Precision added five term contracts for
new build Super Series rigs expected to go to work in 2010 and
2011.
Capital expenditures are expected to be approximately $218
million for 2010, with approximately $144 million for upgrade and
maintenance capital to existing equipment fleets and $74 million
for expansion capital. Capital expenditures for North American and
international rig tier improvements are included in upgrade
capital. The expansion capital program includes nine new build
Super Series rigs and additional rental and water treatment
equipment.
The first nine months of 2010 experienced substantially higher
drilling activity in Canada than the prior year and United States
drilling activity continues to make improvements. The demand for
energy is rising as the global economies are starting to improve
and move out of the bottom of the recession. There is also
increased liquidity in the capital markets as well as higher oil
commodity prices which is providing some of Precision's customers'
liquidity to increase drilling programs. The drilling sector in
both Canada and the United States is experiencing a period of
year-over-year improvements in utilization. According to industry
sources, as at October 15, 2010, the United States active land
drilling rig count was up about 64% from the same period in the
prior year while the Canadian drilling rig count had increased
about 69%. Even with the year-over-year improvements in rig
utilization, there has been virtually no change in spot market
dayrates charged to customers in Canada, and only modest
improvements in dayrates in the United States. Future improvements
in dayrates are expected in Canada as we move into 2011 and United
States rates are expected to continue to modestly improve.
Due to the increased demand for drilling rigs, Precision is
experiencing increased demand for rig personnel. On October 1, 2010
a wage increase to Canadian rig based personnel went into effect.
Precision is also seeing this increase in demand for rig personnel
in the United States and a near-term wage increase in the United
States is a possibility. Precision expects to recoup the majority
of these wage increases, if implemented, through higher dayrates to
our customers.
Natural gas production in the United States has remained strong
despite reduced drilling activity over the last two years. United
States natural gas storage levels are currently near the upper
range of the five-year average but slightly below storage levels of
a year ago. This also strongly influences Canadian activity since
Canada exports a significant portion of its natural gas production
to the United States. The increase in oil and natural gas liquids
drilling in areas like the Cardium, Bakken and Eagle Ford have been
strong and the United States oil rig count as at October 15, 2010
is 125% higher than it was a year ago. Precision has more equipment
working in oil related plays than at any time in the last 20 years;
however, approximately 40% of Precision's current active rig count
are drilling for natural gas targets.
With high storage levels, consistent production and the view
that North America has an oversupply of natural gas, gas prices
have remained at relatively low levels. To date, there has been
little change in customers' natural gas drilling plans. If low
natural gas prices continue, Precision and the North American
drilling industry could see a further reduction in demand for
natural gas drilling. With the current demand for oil and liquids
rich natural gas drilling, Precision believes further reductions in
gas directed drilling would continue to be offset by increases in
oil and natural gas liquids rich drilling.
Despite near term challenges, the future of the global oil and
gas industry remains promising. For Precision, 2010 represents an
opportunity to demonstrate our value to customers through delivery
of High Performance High Value services that deliver low customer
well costs and strong margins to Precision.
Beginning January 1, 2011, Precision will be reporting its
financial statements under International Financial Reporting
Standards ("IFRS") and future financial statements will be required
to be prepared in compliance with IFRS as if Precision had always
followed these standards. Certain first time adoption elections may
be made which will impact the opening balance sheet amounts and
those key first-time elections are discussed later in this report
under the section "Transition to International Financial Reporting
Standards (IFRS)."
SEGMENTED FINANCIAL RESULTS
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.
(stated in Three months ended Nine months ended
thousands of September 30, September 30,
Canadian 2010 2009 % 2010 2009 %
dollars) Change Change
----------------------------------------------------------------------------
Revenue:
Contract
Drilling
Services $ 305,813 $ 216,391 41.3 $ 845,515 $ 791,496 6.8
Completion
and
Production
Services 55,209 38,738 42.5 156,239 127,303 22.7
Inter-segment
eliminations (1,870) (1,792) 4.4 (7,638) (7,420) 2.9
----------------------------------------------------------------------------
$ 359,152 $ 253,337 41.8 $ 994,116 $ 911,379 9.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EBITDA(1)
Contract
Drilling
Services $ 105,806 $ 86,094 22.9 $ 279,565 $ 308,543 (9.4)
Completion
and
Production
Services 15,584 8,250 88.9 36,901 29,816 23.8
Corporate and
other (8,793) (8,605) 2.2 (26,472) (23,973) 10.4
----------------------------------------------------------------------------
$ 112,597 $ 85,739 31.3 $ 289,994 $ 314,386 (7.8)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".
SEGMENT REVIEW OF CONTRACT DRILLING SERVICES
(stated in
thousands of
Canadian Three months ended Nine months ended
dollars, September 30, September 30,
except where 2010 2009 % 2010 2009 %
noted) Change Change
----------------------------------------------------------------------------
Revenue $ 305,813 $ 216,391 41.3 $ 845,515 $ 791,496 6.8
Expenses:
Operating 186,883 117,200 59.5 525,716 439,513 19.6
General and
administrative 13,124 13,097 0.2 40,234 43,440 (7.4)
----------------------------------------------------------------------------
EBITDA (1) 105,806 86,094 22.9 279,565 308,543 (9.4)
Depreciation 40,509 25,610 58.2 112,562 87,007 29.4
----------------------------------------------------------------------------
Operating
earnings(1) $ 65,297 $ 60,484 8.0 $ 167,003 $ 221,536 (24.6)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating
earnings as a
percentage
of revenue 21.4% 28.0% 19.8% 28.0%
----------------------------------------------------------------------------
Drilling rig
revenue per
utilization
day in
Canada(2) $ 15,686 $ 18,195 (13.8) $ 15,681 $ 18,384 (14.7)
----------------------------------------------------------------------------
Drilling rig
revenue per
utilization
day in the
United
States(2) US$ 18,914 US$ 22,497 (15.9) US$ 18,792 US$ 24,344 (22.8)
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".
(2) Includes revenue from idle but contracted rig days and lump sum payouts.
Three months ended September 30,
Canadian onshore drilling
statistics:(1) 2010 2009
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs
(end of period) 202 805 226 865
Drilling rig operating
days (spud to release) 6,816 29,575 4,232 16,406
Drilling rig operating
day utilization 37% 40% 20% 21%
Number of wells drilled 820 3,178 584 2,004
Average days per well 8.3 9.3 7.2 8.2
Number of metres drilled
(000s) 1,288 5,422 891 3,046
Average metres per well 1,571 1,706 1,525 1,520
Average metres per day 189 183 210 186
----------------------------------------------------------------------------
Nine months ended September 30,
Canadian onshore drilling
statistics:(1) 2010 2009
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs
(end of period) 202 805 226 865
Drilling rig operating
days (spud to release) 19,315 82,941 13,103 53,017
Drilling rig operating
day utilization 35% 38% 21% 22%
Number of wells drilled 2,077 7,902 1,666 5,909
Average days per well 9.3 10.5 7.9 9.0
Number of metres drilled
(000s) 3,457 13,757 2,487 8,482
Average metres per well 1,665 1,741 1,493 1,435
Average metres per day 179 166 190 160
----------------------------------------------------------------------------
(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) 2010 2009
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Average number of active
land rigs for quarters
ended:
March 31 78 1,297 82 1,287
June 30 88 1,464 50 885
September 30 93 1,603 53 936
----------------------------------------------------------------------------
Year to date average 86 1,463 61 1,036
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.
Contract Drilling Services segment revenue for the third quarter
of 2010 increased by 41% to $306 million and EBITDA increased by
23% to $106 million compared to the same period in 2009. The
increase in revenue and EBITDA was due to the higher drilling rig
activity in both Canada and the United States.
Activity in North America was impacted by increased customer
demand due to the improvement in global oil prices; this was offset
by wet weather conditions in western Canada restricting drilling
rig mobility. Drilling rig revenue per utilization day in Canada
was down 14% over the prior year as a result of increased activity
in the competitive spot market. During the quarter, 32% of
Precision's utilization days in Canada were generated from rigs
under term contract compared with 42% in 2009 while in the United
States 57% of utilization days were generated from rigs under term
contract compared with 82% in 2009. The majority of the additional
activity was associated with oil related plays. As at the end of
the quarter in the United States, there were 59 drilling rigs
working under term contracts and 36 in Canada.
Drilling rig utilization days (spud to rig release plus move
days) in Canada during the third quarter of 2010 were 7,557, an
increase of 62% compared to 4,653 in 2009. Drilling rig activity
for Precision in the United States was 76% higher than the same
quarter of 2009 due to the recovery of drilling rig activity which
began in the third quarter of 2009. Precision had two rigs working
in Mexico during both periods. Precision's camp and catering
division benefited from the start up of a 500 man base camp in
Canada that is expected to be contracted through the end of
2010.
Contract Drilling Services operating costs were 61% of revenue
for the quarter compared to 54% for the prior year quarter. The
increase was primarily associated with the lower rig rates received
in the spot market. On a per day basis, operating costs for the
drilling rig division in Canada were 6% lower than the prior year
quarter due to the differences in rig mix as 2010 had a higher
proportion of days from single and double rigs which typically
require less ancillary equipment. Operating costs for the quarter
in the United States on a per day basis were down from the
comparable period in 2009 due to lower labour costs and lower ad
valorem taxes partially offset by higher repairs and maintenance,
as drilling rigs are put back into service.
Quarterly depreciation in the Contract Drilling Services segment
increased 58% from the prior year due to the increase in activity
in both Canada and the United States. Both the United States and
Canadian contract drilling operations use the unit of production
method of calculating depreciation.
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES
(stated in
thousands of Three months ended Nine months ended
Canadian September 30, September 30,
dollars, except 2010 2009 % 2010 2009 %
where noted) Change Change
----------------------------------------------------------------------------
Revenue $ 55,209 $ 38,738 42.5 $ 156,239 $ 127,303 22.7
Expenses:
Operating 37,452 27,790 34.8 112,928 90,318 25.0
General and
administrative 2,173 2,698 (19.5) 6,410 7,169 (10.6)
----------------------------------------------------------------------------
EBITDA(1) 15,584 8,250 88.9 36,901 29,816 23.8
Depreciation 5,611 3,714 51.1 16,164 12,405 30.3
----------------------------------------------------------------------------
Operating
earnings(1) $ 9,973 $ 4,536 119.9 $ 20,737 $ 17,411 19.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings
as a percentage
of revenue 18.1% 11.7% 13.3% 13.7%
----------------------------------------------------------------------------
Well servicing
statistics:
Number of service
rigs (end of
period) 200 229 (12.7) 200 229 (12.7)
Service rig
operating hours 70,265 49,581 41.7 195,277 147,253 32.6
Service rig
operating hour
utilization 38% 24% 31% 24%
Service rig
revenue per
operating
hour $ 595 $ 614 (3.1) $ 608 $ 664 (8.4)
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".
Completion and Production Services segment revenue for the third
quarter increased by 43% from 2009 to $55 million and EBITDA
increased by 89% to $16 million. The increase in revenue was
attributed to an increase in operating hours and the increase in
EBITDA was the result of higher activity along with a decrease in
variable costs.
Service rig activity increased 42% from the prior year period,
with the service rig fleet generating 70,265 operating hours in the
third quarter of 2010 compared with 49,581 hours in the prior year
quarter for utilization of 38% and 24%, respectively. The increase
was a result of higher service rig demand for completions of new
wells along with production maintenance of existing wells, both
with an emphasis on oil wells. New well completions accounted for
26% of service rig operating hours in the third quarter compared to
23% in the same quarter in 2009.
Average service revenue decreased $19 per operating hour to $595
from the prior year period due to the impact of wage reductions
implemented in late 2009 that were passed along to customers.
Operating costs as a percentage of revenue decreased to 68% in
the third quarter of 2010 from 72% in the same period of 2009 as
lower variable operating expenses and fixed costs spread over a
higher activity base were offset by lower revenue rates in the
service rig division. Operating costs per service rig operating
hour have decreased over the comparable period in 2009 due
primarily to lower wages, partially offset by higher repair and
maintenance costs to prepare for increased activity.
Depreciation in the Completion and Production Services segment
in the third quarter of 2010 was 51% higher than the prior year due
to higher equipment utilization.
SEGMENT REVIEW OF CORPORATE AND OTHER
Corporate and other expenses for the third quarter of 2010 was
in-line with the prior year comparative period at $9 million.
OTHER ITEMS
Net financial charges were $22 million for the third quarter of
2010 which was down from $8 million when compared to the prior year
quarter. The decrease was attributable to the significant reduction
in long-term debt achieved by Precision.
The Corporation had a foreign exchange gain of $18 million
during the third quarter of 2010 due to the strengthening of the
Canadian dollar versus the United States dollar, as the majority of
the Corporation's credit facilities are denominated in United
States dollars.
Precision's effective tax rate on earnings before income taxes
for the first nine months of 2010 was 15% compared to 9% for the
same period in 2009. The higher effective tax rate for 2010 is
primarily the result of withholding, capital and state taxes
incurred in a period of lower pretax earnings and foreign exchange
gains offset by income taxed at lower rates.
LIQUIDITY AND CAPITAL RESOURCES
In June 2010, Precision converted to a corporation pursuant to a
Plan of Arrangement under the Business Corporations Act of Alberta.
Precision obtained approval for the conversion from its unitholders
in conjunction with its 2010 Annual and Special Meeting of
Unitholders held on May 11, 2010. An information circular and proxy
statement was mailed to unitholders in connection with the
meeting.
The oilfield services business is inherently cyclical in nature.
Precision employs a disciplined approach to minimize costs through
operational management practices and a variable cost structure, and
to maximize revenues through term contract positions with a focus
of maintaining a strong balance sheet. This operational discipline
provides Precision with the financial flexibility to capitalize on
strategic acquisitions and internal growth opportunities at all
points in the business cycle.
Operating within a highly variable cost structure, Precision's
maintenance capital expenditures are tightly governed by and highly
responsive to activity levels with additional cost savings leverage
provided through Precision's internal manufacturing and supply
divisions. Expansion capital for new rig build programs require 2 -
5 year term contracts in order to mitigate capital recovery risk.
To capitalize on market opportunities Precision increased its
anticipated capital expenditures by $29 million to a total of $218
million for 2010.
In managing foreign exchange risk, Precision endeavours to align
the currency of the majority of its debt obligations and capital
expenditures with the currency of the supporting operating cash
flows. Interest rate risk is partially managed through hedging
activities and by reducing debt.
During the third quarter of 2010 Precision used $98 million in
operating cash inflow to fund a $30 million increase in non-cash
working capital, $31 million in net capital spending and $13
million in long-term debt reduction. Liquidity remains sufficient
as Precision had a cash balance of $209 million and the US$410
million revolver in its senior secured credit facility ("Secured
Facility") remains undrawn except for US$25 million in outstanding
letters of credit as at September 30, 2010. In addition to the
Secured Facility, Precision has available $40.4 million in
operating facilities (net of letters of credit of $0.7 million)
which is used for working capital management. During the current
quarter, working capital increased by $49 million over the second
quarter of 2010 to $392 million.
As at September 30, 2010, the Corporation was in compliance with
the covenants under the Secured Facility. Precision expects to
remain in compliance with financial covenants under its Secured
Facility and have complete access to credit lines during 2010. The
Secured Facility contains customary covenants including three
financial covenants: a leverage ratio; interest coverage ratio; and
fixed charge coverage ratio.
The current blended cash interest cost of Precision's debt is
approximately 7.0%. Precision has repaid $104 million in debt
during 2010 and may consider further voluntary long-term debt
reduction or refinancing as industry fundamentals stabilize and
operating cash flow forecasts become clearer. As at September 30,
2010, approximately $598 million was outstanding under the Secured
Facility and $175 million was outstanding under the unsecured
facility.
On June 30, 2010, the Corporation amended the terms of the
Secured Facility to lower the LIBOR floor for the Term Loan B
facility to 1.75% from 3.25% and lower the LIBOR interest rate
margin on existing loans under the Term Loan B facility to 5.0%
from an average interest rate margin of 6.45%. The Secured Facility
was also amended to provide for the payment in certain
circumstances by the Corporation to lenders under the Term Loan B
facility of a fee equal to 1.0% of the aggregate principal amount
of loans subsequently prepaid or re-priced under the Term Loan B
facility on or prior to September 30, 2011. In connection with the
amendments to the Secured Facility, non-consenting holders of US$74
million in loans under the Term Loan B facility were repaid by the
Corporation with cash on hand.
During the second quarter of 2010, Precision amended the terms
of the Secured Facility to increase the size of the revolving
credit facility to US$410 million from US$260 million. In addition,
a subsidiary of Precision arranged a new secured operating facility
in the amount of US$15 million with a U.S. bank. Advances under
this facility are at the bank's prime lending rate.
During the first quarter of 2010, Precision amended certain
covenants and terms contained in the Secured Facility. These
amendments included an increase in the leverage ratio test from
3.00:1 to 3.50:1 through December 31, 2011, a decrease in the
interest coverage ratio test from 3.00:1 to 2.75:1 through December
31, 2011 and the removal of the restrictions on expansion related
capital expenditures (limitations on total capital expenditures
remained unchanged).
QUARTERLY FINANCIAL SUMMARY
(stated in thousands of Canadian dollars, except per share/unit amounts)
2009 2010
----------------------------------------------------------------------------
Quarters ended December 31 March 31 June 30 September 30
----------------------------------------------------------------------------
Revenue $ 286,067 $ 373,136 $ 261,828 $ 359,152
EBITDA(1) 92,615 118,403 58,994 112,597
Net earnings (loss): (24,885) 62,017 (66,547) 61,078
Per basic share/unit (0.09) 0.23 (0.24) 0.22
Per diluted share/unit (0.09) 0.22 (0.24) 0.21
Cash provided by operations 70,631 20,624 142,004 67,575
Distributions - declared $ - $ - $ - $ -
----------------------------------------------------------------------------
2008 2009
----------------------------------------------------------------------------
Quarters ended December 31 March 31 June 30 September 30
----------------------------------------------------------------------------
Revenue $ 335,049 $ 448,445 $ 209,597 $ 253,337
EBITDA(1) 134,795 169,387 59,260 85,739
Net earnings: 92,376 57,417 57,475 71,696
Per basic share/unit 0.67 0.30 0.23 0.26
Per diluted share/unit 0.66 0.28 0.22 0.25
Cash provided by operations 82,904 201,596 212,554 19,948
Distributions - declared $ 77,551 $ 6,408 $ - $ -
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".
NON-GAAP MEASURES
Precision uses certain measures that are not recognized under
Canadian generally accepted accounting principles to assess
performance and believes these non-GAAP measures provide useful
supplemental information to investors. Following are the non-GAAP
measures Precision uses in assessing performance.
EBITDA
Management believes that in addition to net earnings, EBITDA, as
derived from information reported in the Consolidated Statements of
Earnings and Retained 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, the impact of foreign exchange, how the
results are taxed, how funds are invested or how depreciation and
amortization charges affect results.
The following table provides a reconciliation of net earnings
under GAAP, as disclosed in the Consolidated Statement of Earnings
and Retained Earnings, to EBITDA.
Three months ended Nine months ended
(stated in thousands of September 30, September 30,
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
EBITDA $ 112,597 $ 85,739 $ 289,994 $ 314,386
Add (deduct):
Depreciation and amortization (47,300) (30,378) (132,288) (102,549)
Foreign exchange 18,003 63,486 11,670 105,055
Finance charges (21,848) (29,396) (102,819) (112,947)
Income taxes (374) (17,755) (10,009) (17,357)
----------------------------------------------------------------------------
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Earnings
Management believes that in addition to net earnings, operating
earnings as reported in the Consolidated Statements of Earnings and
Retained 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, the impact of foreign exchange or how the results are
taxed.
The following table provides a reconciliation of net earnings
under GAAP, as disclosed in the Consolidated Statement of Earnings
and Retained Earnings, to operating earnings.
Three months ended Nine months ended
(stated in thousands of September 30, September 30,
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Operating earnings $ 65,297 $ 55,361 $ 157,706 $ 211,837
Add (deduct):
Foreign exchange 18,003 63,486 11,670 105,055
Finance charges (21,848) (29,396) (102,819) (112,947)
Income taxes (374) (17,755) (10,009) (17,357)
----------------------------------------------------------------------------
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRS)
Precision is required to report its financial results in
accordance with IFRS from January 1, 2011, the changeover date set
by the Canadian Accounting Standards Board (AcSB). IFRS compliant
comparative financial information for one year will be required on
the effective date.
Precision's IFRS project is on schedule and progressing well.
Precision's IFRS project team and management continue to liaise
with the external auditors and key stakeholders in the company to
enable timely and smooth transition to IFRS in 2011.
With respect to the key areas identified in previous reports,
the following is a summary of additional progress:
IFRS 1 - First Time Adoption
IFRS 1 - First Time Adoption of IFRS - provides one-time
accounting choices in the form of mandatory and optional
exemptions.
Precision has identified the preferred IFRS 1 elections and
calculated the potential impact of the elections on its financial
statements.
Precision intends to restate its December 2008 acquisition of
Grey Wolf under the principles outlined in IFRS 3 - Business
Combinations. This is expected to reduce goodwill on Precision's
balance sheet by the amount of goodwill recorded on acquisition of
US$456 million with an equivalent reduction in shareholder's
capital. The difference arises in the accounting for the purchase
consideration under IFRS versus Canadian GAAP. Under Canadian GAAP
purchase consideration is valued based on Precision's share price
on the date at which the acquisition was announced and under IFRS
it is valued based on the share price on the date at which the
acquisition closed.
In accordance with the guidance in IFRS 1, upon implementation
of IFRS, Precision intends to record certain larger drilling rigs
located in the United States at fair value as the deemed cost.
Precision's project team and management are currently in the
process of obtaining valuations for the selected rigs. It is
anticipated that the one-time adjustment to the carrying value of
these rigs to bring them to their fair value at the time of initial
adoption of IFRS is a reduction of carrying value in the range of
$125 million to $175 million. The offsetting entry will be recorded
in retained earnings. The adjustment to the carrying value is
subject to finalization of the valuation estimate and review by
Precision's auditor.
Precision has rebuilt historical records as if it had always
followed IFRS principles except for those drilling rigs identified
in the preceding paragraph. As a result of rebuilding Precision's
historical records, there is expected to be a reduction in the
opening IFRS net book value for property, plant and equipment of
approximately $115 million. The offsetting entry will be recorded
in retained earnings as required under IFRS 1.
Capital Assets
Precision's IFRS project team has analyzed the potential impact
of component accounting on Precision's financial statements. Based
on the data collected by the IFRS team in 2010, it is anticipated
that upon adoption of IFRS, annual depreciation and amortization
expense will increase by 20% to 30%. This is primarily due to the
componentization of drilling rigs into three categories. The
additional two categories are meant to better reflect the shorter
useful lives of specific assets on the rig.
Upon transition to IFRS, Precision will be required to
capitalize borrowing costs on capital projects that take a
substantial amount of time to complete. Precision is contemplating
capitalizing borrowing costs for projects that take longer than 12
months to complete. This is not expected to have a significant
impact on Precision's financial statements.
Internal controls over financial reporting of the Capital and
Asset Management process have been reviewed by Precision's IFRS
project team. Internal controls under IFRS are expected to remain
similar to the controls under Canadian GAAP with the exception of
management reports that have been redesigned for transition to
IFRS.
Precision's procedures for property, plant and equipment
accounting have been revised to reflect changes as a result of
transition to IFRS. Precision's budget preparation procedures have
also been revised to incorporate the changes resulting from
differing treatment of capital and expense items under
International Accounting Standards 16, Property, Plant and
Equipment.
Precision's IFRS project team has analyzed a number of options
for an idle asset depreciation policy and is presently discussing a
preferred alternative with senior management.
Financial Statement Disclosure
Sample financial statements were drafted and reviewed by
management in the second quarter 2010. In the fourth quarter 2010,
management and Precision's IFRS project team intend to further
refine the sample financial statements to enable efficient and
timely preparation of the first set of fully compliant IFRS
statements for the first quarter 2011.
Income Taxes
Precision's Income Tax team continues to work on analyzing and
implementing the requirements of IAS 12 Income Taxes.
Impairments
Precision continues to refine its IFRS Impairment test model by
testing and reviewing the assumptions used in the model.
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", "propose", "plan", "expect", "believe",
"will", "may" 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: global demand for
energy is rising; customer demand for oil and natural gas liquids
drilling; active rig counts remaining stable or increasing; the rig
count and utilization will continue to increase; increased
liquidity in capital markets and higher oil commodity prices
provide liquidity for customers to increase drilling programs;
United States activity levels will continue to improve with oil and
gas liquids rich activity leading the way; North American drilling
activity levels will be higher in the fourth quarter of 2010 and,
in Canada, during the 2011 winter drilling season; amount, timing,
and allocation of capital expenditures; the potential for further
reduction in natural gas drilling and related activity; the outcome
of discussions regarding potential new build opportunities for
rigs; the marketability of upgraded rigs; market dayrates will
continue to improve; the deployment of new-rig builds and the
location thereof; Precision's financial flexibility; Precision's
expansion of drilling, directional drilling and international
presence; demand for rig personnel and possibility of wage
increases offset by higher dayrates; the potential impacts of
Precision's transition to IFRS; the effectiveness of Precision's
risk management efforts; Precision's continued compliance with its
financial covenants and ability to access its credit lines;
possibility of further voluntary long-term debt reduction or
refinancing; the number of rigs under term contract and the trend
to move to spot market dayrates upon expiry; a reduction in gas
directed drilling would be offset by an increase in oil and gas
liquids rich drilling; and dayrate levels.
These forward-looking information and statements are based on
certain assumptions and analysis made by the Corporation 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 Corporation'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 Corporation'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 contract drilling, well servicing and ancillary oilfield
services; capital market liquidity available to fund customer
drilling programs; the effects of seasonal and weather conditions
on operations and facilities; the existence of competitive
operating risks inherent in contract drilling, well servicing and
ancillary oilfield services; 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.
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 Corporation will be realized or,
even if substantially realized, that they will have the expected
consequences to, or effects on, the Corporation 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, the Corporation 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 BALANCE SHEETS (UNAUDITED)
September 30, December 31,
(stated in thousands of Canadian dollars) 2010 2009
----------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 208,709 $ 130,799
Accounts receivable 339,366 283,899
Income tax recoverable - 25,753
Inventory 9,733 9,008
----------------------------------------------------------------------------
557,808 449,459
Income tax recoverable 64,579 64,579
Property, plant and equipment,
net of accumulated depreciation 2,811,144 2,913,966
Intangibles 2,055 3,156
Goodwill 752,910 760,553
----------------------------------------------------------------------------
$ 4,188,496 $ 4,191,713
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 159,212 $ 128,376
Income taxes payable 2,056 -
Current portion of long-term debt (note 6) 4,483 223
----------------------------------------------------------------------------
165,751 128,599
Long-term liabilities 25,511 26,693
Long-term debt (note 6) 679,291 748,725
Future income taxes 701,171 703,195
----------------------------------------------------------------------------
1,571,724 1,607,212
----------------------------------------------------------------------------
Contingencies (note 10)
Shareholders' equity:
Shareholders' capital (note 3) 2,770,853 -
Unitholders' capital (note 3) - 2,770,708
Contributed surplus (note 3(c)) 8,803 4,063
Retained earnings 163,775 107,227
Accumulated other comprehensive loss (note 7) (326,659) (297,497)
----------------------------------------------------------------------------
2,616,772 2,584,501
----------------------------------------------------------------------------
$ 4,188,496 $ 4,191,713
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (UNAUDITED)
Three months ended Nine months ended
(stated in thousands of September 30, September 30,
Canadian dollars, except
per share amounts) 2010 2009 2010 2009
----------------------------------------------------------------------------
Revenue $ 359,152 $ 253,337 $ 994,116 $ 911,379
Expenses:
Operating 222,465 143,059 631,006 522,411
General and administrative 24,090 24,539 73,116 74,582
Depreciation and
amortization 47,300 30,378 132,288 102,549
Foreign exchange (18,003) (63,486) (11,670) (105,055)
Finance charges (note 9) 21,848 29,396 102,819 112,947
----------------------------------------------------------------------------
Earnings before income
taxes 61,452 89,451 66,557 203,945
Income taxes: (note 4)
Current 608 5,216 4,755 13,380
Future (234) 12,539 5,254 3,977
----------------------------------------------------------------------------
374 17,755 10,009 17,357
----------------------------------------------------------------------------
Net earnings 61,078 71,696 56,548 186,588
Retained earnings
(deficit), beginning of
period 102,697 60,416 107,227 (48,068)
Distributions declared - - - (6,408)
----------------------------------------------------------------------------
Retained earnings , end of
period $ 163,775 $ 132,112 $ 163,775 $ 132,112
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share: (note 11)
Basic $ 0.22 $ 0.26 $ 0.21 $ 0.77
Diluted $ 0.21 $ 0.25 $ 0.20 $ 0.75
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three months ended Nine months ended
September 30, September 30,
(Stated in thousands of
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
Unrealized gain (loss)
recorded on translation of
assets and liabilities of
self-sustaining operations
in foreign currency (52,228) (154,590) (29,162) (265,466)
----------------------------------------------------------------------------
Comprehensive income
(loss) $ 8,850 $ (82,894) $ 27,386 $ (78,878)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Three months ended Nine months ended
September 30, September 30,
(stated in thousands of
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
Adjustments and other items
not involving cash:
Long-term compensation
plans 3,079 4,786 8,884 2,914
Depreciation and
amortization 47,300 30,378 132,288 102,549
Future income taxes (234) 12,539 5,254 3,977
Foreign exchange (18,392) (67,321) (10,595) (118,319)
Amortization of debt issue
costs (note 9) 7,621 7,056 50,400 30,119
Other (2,472) - (1,586) -
Changes in non-cash
working capital balances (30,405) (39,186) (10,990) 226,270
----------------------------------------------------------------------------
67,575 19,948 230,203 434,098
Investments:
Purchase of property,
plant and equipment (35,786) (14,198) (64,953) (179,443)
Proceeds on sale of property,
plant and equipment 2,072 2,428 9,371 10,257
Changes in non-cash
working capital balances 2,395 1,741 7,785 (20,147)
----------------------------------------------------------------------------
(31,319) (10,029) (47,797) (189,333)
Financing:
Repayment of long-term
debt (13,387) (6,567) (103,760) (887,605)
Debt issue costs - (674) (2,165) (21,628)
Re-purchase of trust units
(note 3) - - (6) -
Distributions paid - - - (27,233)
Increase in long-term debt - - - 408,893
Issuance of trust units,
net of issue costs - ( 533) - 413,223
Change in non-cash working
capital balances - (431) - -
----------------------------------------------------------------------------
(13,387) (8,205) (105,931) (114,350)
----------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
cash equivalents (295) (4,164) 1,435 (14,397)
----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 22,574 (2,450) 77,910 116,018
Cash and cash equivalents,
beginning of period 186,135 179,979 130,799 61,511
----------------------------------------------------------------------------
Cash and cash equivalents,
end of period $208,709 $ 177,529 $ 208,709 $ 177,529
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements (UNAUDITED)
(tabular amounts are stated in thousands of Canadian dollars
except share numbers)
1. Description of Business and Basis of Presentation
Precision Drilling Corporation ("Precision" or the
"Corporation") is a provider of contract drilling and completion
and production services primarily to oil and natural gas
exploration and production companies in Canada and the United
States.
On June 1, 2010 Precision Drilling Trust (the "Trust") completed
its conversion (the "Conversion") from an income trust to a
corporation pursuant to a Plan of Arrangement (the "Arrangement").
Pursuant to the Arrangement, Trust unitholders and Exchangeable LP
unitholders exchanged their Trust units and Exchangeable LP units
for common shares of Precision on a one-for-one basis.
The Conversion has been accounted for on a continuity of
interest basis and accordingly these interim financial statements
reflect the financial position, results of operations and cash
flows as if Precision had always carried on the business formerly
carried on by the Trust and were prepared using accounting policies
and methods of their application consistent with those used in the
preparation of the Trust's consolidated audited financial
statements for the year ended December 31, 2009. All references to
shares and shareholders in these financial statements pertain to
common shares and common shareholders subsequent to the Conversion
and units and unitholders prior to the Conversion. These interim
financial statements conform in all material respects to the
requirements of generally accepted accounting principles in Canada
for annual financial statements with the exception of certain note
disclosures. As a result, these interim financial statements should
be read in conjunction with the Trust's consolidated audited
financial statements for the year ended December 31, 2009.
2. Seasonality of Operations
Precision has operations that are carried on in Canada which
represent approximately 41% (2009 - 38%) of consolidated total
assets as at September 30, 2010 and 52% (2009 - 45%) of
consolidated revenue for the nine months ended September 30, 2010.
The ability to move heavy equipment in Canadian oil and natural gas
fields is dependent on weather conditions. As warm weather returns
in the spring, the winter's frost comes out of the ground rendering
many secondary roads incapable of supporting the weight of heavy
equipment until they have thoroughly dried out. The duration of
this "spring break-up" has a direct impact on Precision's activity
levels. In addition, many exploration and production areas in
northern Canada are accessible only in winter months when the
ground is frozen hard enough to support equipment. The timing of
freeze up and spring break-up affects the ability to move equipment
in and out of these areas. As a result, late March through May is
traditionally Precision's slowest time in this region.
3. Shareholders' Capital
(a) Authorized - unlimited number of voting common shares
- unlimited number of preferred shares, issuable in series
(b) Issued:
Common shares Number Amount
----------------------------------------------------------------------------
Balance May 31, 2010 - $ -
Issued pursuant to the Arrangement 275,663,344 2,770,853
----------------------------------------------------------------------------
Balance September 30, 2010 275,663,344 $ 2,770,853
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The following provides a continuity of Trust units and
Exchangeable LP units from January 1, 2010 up to the Conversion on
June 1, 2010.
Trust units Number Amount
----------------------------------------------------------------------------
Balance December 31, 2009 275,516,778 $ 2,769,338
Issued on redemption of non-management
directors DSU's 28,586 154
Cancellation of units owned by dissenting
unitholders (840) (9)
----------------------------------------------------------------------------
Balance May 31, 2010 275,544,524 $ 2,769,483
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Exchangeable LP units Number Amount
----------------------------------------------------------------------------
Balance December 31, 2009 and May 31, 2010 118,820 $ 1,370
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Summary Number Amount
----------------------------------------------------------------------------
Trust units 275,544,524 $ 2,769,483
Exchangeable LP units 118,820 1,370
----------------------------------------------------------------------------
Unitholders' capital, May 31, 2010 275,663,344 $ 2,770,853
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Pursuant to the Arrangement, any unitholder of the Trust could
dissent and be paid the fair value of the units, being the trading
price of Trust units at the close of business on the last business
day prior to the Annual and Special Meeting of Unitholders on May
11, 2010. As a result a total of 840 units were repurchased for
cancellation for six thousand dollars, of which a discount of three
thousand dollars over the stated capital was credited to
contributed surplus.
(c) Contributed surplus
Amount
----------------------------------------------------------------------------
Balance December 31, 2009 $ 4,063
Share based compensation expense 4,891
Redemption of non-management directors DSU's (154)
Cancellation of units owned by dissenting unitholders 3
----------------------------------------------------------------------------
Balance September 30, 2010 $ 8,803
----------------------------------------------------------------------------
----------------------------------------------------------------------------
4. Income Taxes
The provision for income taxes differs from that which would be
expected by applying statutory Canadian income tax rates. A
reconciliation of the difference at September 30 is as follows:
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
----------------------------------------------------------------------------
Earnings before income taxes
$ 61,452 $ 89,451 $ 66,557 $ 203,945
Federal and provincial statutory
rates 28% 29% 28% 29%
----------------------------------------------------------------------------
Tax at statutory rates $ 17,207 $ 25,941 $ 18,636 $ 59,144
Adjusted for the effect of:
Non-deductible expenses 4,879 1,644 5,343 6,372
Non-taxable capital gains (128) (16,248) (128) (16,816)
Income taxed at lower rates (19,191) (1,388) (21,173) (36,812)
Income to be distributed to
unitholders, not subject to tax
in the Trust - (202) - (2,525)
Other (2,393) 8,008 7,331 7,994
----------------------------------------------------------------------------
Income tax expense $ 374 $ 17,755 $ 10,009 $ 17,357
----------------------------------------------------------------------------
----------------------------------------------------------------------------
5. Bank Indebtedness
During the second quarter of 2010 a U.S. subsidiary of the
Corporation arranged a new US$15.0 million secured operating
facility with a U.S. bank. Advances under this facility are
available at the bank's prime lending rate.
In total the Corporation and its subsidiaries have $25.0 million
and US$15.0 million of secured operating facilities. At September
30, 2010 no amounts were drawn on these facilities. Availability of
the $25.0 million facility was reduced by outstanding letters of
credit in the amount of $0.7 million at September 30, 2010.
6. Long-Term Debt
September 30, December 31,
2010 2009
----------------------------------------------------------------------------
Secured facility:
Term Loan A $ 271,018 $ 288,887
Term Loan B 327,208 422,097
Revolving credit facility - -
Unsecured senior notes 175,000 175,000
----------------------------------------------------------------------------
773,226 885,984
Less net unamortized debt issue costs (89,452) (137,036)
----------------------------------------------------------------------------
683,774 748,948
Less current portion (4,483) (223)
----------------------------------------------------------------------------
$ 679,291 $ 748,725
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At September 30, 2010 the Term Loan A facility consists of a
term A-1 facility denominated in U.S. dollars in the amount of
US$245.3 million and a term A-2 facility denominated in Canadian
dollars in the amount of $18.4 million.
At September 30, 2010 the Term Loan B facility consists of a
term loan B-1 facility and a term loan B-2 facility denominated in
U.S. dollars in the amounts of US$270.3 million and US$47.4
million, respectively.
During the second quarter of 2010, the terms of the secured
facility were amended to lower the LIBOR floor for the Term Loan B
facility to 1.75% from 3.25% and lower the LIBOR interest rate
margin on existing loans under the Term Loan B facility to 5.0%
from an average interest rate margin of 6.45%. The secured facility
was also amended to provide for the payment in certain
circumstances by Precision to lenders under the Term Loan B
facility of a fee equal to 1.0% of the aggregate principal amount
of loans subsequently prepaid or re-priced under the Term Loan B
facility on or prior to September 30, 2011. In connection with the
amendments to the secured facility, non-consenting holders of
US$74.0 million in loans under the Term Loan B facility were
repaid. After the amendment the current blended cash interest cost
of Precision's debt is approximately 7.0%.
In addition, the revolving credit facility lending capacity
increased by US$150.0 million to US$410.0 million and is available
to Precision to finance working capital needs and for general
corporate purposes. Availability of the revolving credit facility
was reduced at September 30, 2010 by outstanding letters of credit
of US$24.9 million.
During the first quarter of 2010 Precision amended certain
covenants and terms contained in the secured facility. These
amendments included an increase in the leverage ratio test from
3.00:1 to 3.50:1 through December 31, 2011, a decrease in the
interest coverage ratio test from 3.00:1 to 2.75:1 through December
31, 2011 and the removal of the restrictions on expansion related
capital expenditures (limitations on total capital expenditures
remained unchanged).
At September 30, 2010 mandatory principal repayments are as follows:
For the twelve month periods ended September 30,
----------------------------------------------------------------------------
2011 $ 4,483
2012 55,094
2013 71,243
2014 467,406
2015 58,333
Thereafter 116,667
----------------------------------------------------------------------------
7. Accumulated Other Comprehensive Loss
----------------------------------------------------------------------------
Balance, December 31, 2009 $ (297,497)
Unrealized foreign currency translation (29,162)
----------------------------------------------------------------------------
Balance, September 30, 2010 $ (326,659)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
8. Share Based Compensation Plans
The Conversion did not result in any significant changes to
Precision's share based compensation plans except that certain
elements of the plans that were based on the Trust's unit price
prior to the Conversion are now based on Precision's common share
price.
(a) Officers and Employees
During 2009 Precision introduced two new share based incentive
plans to replace the Performance Saving Plan and the Long-Term
Incentive Plan. Under the Restricted Share incentive plan shares
granted to eligible employees vest annually over a three year term.
Vested shares are automatically paid out in cash in the first
quarter of the year following vesting at a value determined by the
fair market value of the shares as at December 31 of the vesting
year. Under the Performance Share incentive plan shares granted to
eligible employees vest at the end of a three year term. Vested
shares are automatically paid out in cash in the first quarter
following the vested term at a value determined by the fair market
value of the shares at December 31 of the vesting year and based on
the number of performance shares held multiplied by a performance
factor that ranges from zero to two times. The performance factor
is based on Precision achieving a predetermined rate of return on
capital employed and share price performance compared to a peer
group over the three year period. As at September 30, 2010 $2.9
million is included in accounts payable and $7.3 million in
long-term liabilities for the plans. Included in net earnings for
the three and nine months ended September 30, 2010 is an expense of
$2.1 million (2009 - $2.9 million) and $5.6 million (2009 - $5.3
million), respectively.
Notwithstanding that the Performance Savings Plan was replaced
in 2009, certain liabilities continue to exist as eligible
participants were able to elect to receive a portion of their
annual performance bonus in the form of deferred shares. All
deferred shares must be redeemed within 60 days of ceasing to be an
employee of Precision or by the end of the second full calendar
year after receipt. A summary of the deferred shares outstanding
under this share based incentive plan is presented below:
Deferred Shares Outstanding
----------------------------------------------------------------------------
Balance, December 31, 2009 245,916
Redeemed on employee resignations and withdrawals (35,419)
----------------------------------------------------------------------------
Balance, September 30, 2010 210,497
----------------------------------------------------------------------------
----------------------------------------------------------------------------
As at September 30, 2010 $1.4 million is included in accounts
payable and accrued liabilities for outstanding deferred shares.
Included in net earnings for the three and nine months ended
September 30, 2010 is an expense recovery of $0.1 million (2009 -
$0.5 million expense) and $0.3 million (2009 - $0.8 million
expense), respectively.
Precision has a Unit Appreciation Rights ("UAR") plan. Under the
plan eligible participants were granted UAR's that entitle the
rights holder to receive cash payments calculated as the excess of
the market price per common share over the exercise price per UAR
on the exercise date. The UAR's vest over a period of 5 years and
expire 10 years from the date of grant. No amounts relating to the
UAR plan have been recorded as compensation expense or accrued
liability as at September 30, 2010 and 2009 as the intrinsic value
of the awards was nil.
(b) Executive
In 2007 Precision instituted a Deferred Signing Bonus Share Plan
for its Chief Executive Officer. Under the plan 178,336 notional
shares were granted on September 1, 2007. The shares were
redeemable one-third annually beginning September 1, 2008 and were
settled for cash based on the share trading price on redemption.
The final tranche from this plan was redeemed during the third
quarter of 2010. Included in net earnings for the three months and
nine months ended September 30, 2010 is an expense recovery of $20
thousand (2009 - $0.2 million expense) and $60 thousand (2009 -
$0.4 million expense recovery), respectively.
(c) Non-management directors
Precision has a deferred share plan for non-management
directors. Under the plan fully vested deferred shares are granted
quarterly based upon an election by the non-management director to
receive all or a portion of their compensation in deferred shares.
These deferred shares are redeemable into an equal number of common
shares any time after the director's retirement. A summary of
deferred shares outstanding under this share based incentive plan
is presented below:
Number
Outstanding
----------------------------------------------------------------------------
Balance, December 31, 2009 290,732
Granted 105,381
Redeemed (28,586)
----------------------------------------------------------------------------
Balance, September 30, 2010 367,527
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the three and nine months ended September 30, 2010 Precision
expensed $0.3 million (2009 - $0.3 million) and $0.8 million (2009
- $1.1 million), respectively, as unit based compensation, with a
corresponding increase in contributed surplus.
(d) Option plan
Precision has a share option plan under which a combined total
of 10,303,253 options to purchase common shares are reserved to be
granted to employees. Of the amount reserved, 4,022,925 options
have been granted. Under this plan, the exercise price of each
option equals the fair market value of the option at the date of
grant determined by the weighted average trading price for the five
days preceding the grant. The options vest over a period of three
years from the date of grant as employees render continuous service
to Precision and have a term of seven years.
A summary of the status of the equity incentive plan as at September 30,
2010 is presented below:
Weighted
Range of average
Options exercise exercise Options
outstanding price price exercisable
----------------------------------------------------------------------------
Outstanding as at
December 31, 2009 1,787,700 $ 5.22 - 7.23 $ 5.61 -
Granted 2,093,725 7.33 - 8.59 8.27
Forfeitures (128,000) 5.10 - 8.59 6.12
----------------------------------------------------------------------------
Outstanding as at
September 30, 2010 3,753,425 $ 5.10 - 8.59 $ 7.13 571,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The weighted average fair value of the options granted during
2010 was $3.78 per option estimated on the grant date using the
Black-Scholes option pricing model with the following assumption:
average risk-free interest rate 2.2%, average expected life of four
years, expected forfeiture rate of 5% and expected volatility of
59%. Included in net earnings for the three and nine months ended
September 30, 2010 is an expense of $1.3 million (2009 - $0.9
million) and $4.1 million (2009 - $1.1 million), respectively.
9. Finance Charges
The following table provides a summary of the finance charges:
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
----------------------------------------------------------------------------
Interest:
Long-term debt $ 14,533 $ 21,794 $ 51,893 $ 80,262
Other 31 635 63 2,856
Income (337) (89) (534) (290)
Amortization of debt issue costs 7,017 7,056 24,777 20,220
Accelerated amortization of debt
issue costs from voluntary debt
repayments 604 - 1,590 -
Loss on settlement of debt
facilities - - 25,030 9,899
----------------------------------------------------------------------------
Finance charges $ 21,848 $ 29,396 $ 102,819 $ 112,947
----------------------------------------------------------------------------
----------------------------------------------------------------------------
10. Contingencies
The business and operations of Precision are complex and
Precision has executed a number of significant financings, business
combinations, acquisitions and dispositions over the course of its
history. The computation of income taxes payable as a result of
these transactions involves many complex factors as well as
Precision's interpretation of relevant tax legislation and
regulations. Precision's management believes that the provision for
income tax is adequate and in accordance with generally accepted
accounting principles and applicable legislation and regulations.
However, there are a number of tax filing positions that can still
be the subject of review by taxation authorities who may
successfully challenge Precision's interpretation of the applicable
tax legislation and regulations, with the result that additional
taxes could be payable by Precision and the amount owed, with
estimated interest but without penalties, could be up to $412
million, including the estimated amount pertaining to the long-term
income tax recoverable.
11. Per Share Amounts
The following tables reconcile the net earnings and weighted
average shares outstanding used in computing basic and diluted
earnings per share:
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
----------------------------------------------------------------------------
Net earnings - basic $ 61,078 $ 71,696 $ 56,548 $ 186,588
Impact of assumed conversion of
convertible debt, net of tax - - - 1,723
----------------------------------------------------------------------------
Net earnings - diluted $ 61,078 $ 71,696 $ 56,548 $ 188,311
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Weighted average shares outstanding
- basic 275,663 275,636 275,650 233,119
Effect of rights offering - - - 8,236
----------------------------------------------------------------------------
Weighted average shares outstanding
- basic 275,663 275,636 275,650 241,355
Effect of common share warrants 8,161 7,335 8,629 4,227
Effect of share options and other
equity compensation plans 490 218 550 155
Effect of convertible debt - - - 5,195
Effect of rights offering - - - 456
----------------------------------------------------------------------------
Weighted average shares outstanding
- diluted 284,314 283,189 284,829 251,388
----------------------------------------------------------------------------
----------------------------------------------------------------------------
12. Segmented Information
Precision operates primarily in Canada and the United States, in
two segments; Contract Drilling Services and Completion and
Production Services. Contract Drilling Services includes drilling
rigs, procurement and distribution of oilfield supplies, camp and
catering services and manufacture, sale, and repair of drilling
equipment. Completion and Production Services includes service
rigs, snubbing units, wastewater treatment units, and oilfield
equipment rental.
Completion
Contract and
Three months ended Drilling Production Corporate Inter-segment
September 30, 2010 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 305,813 $ 55,209 $ - $ (1,870) $ 359,152
Segment profit
(loss) 65,297 9,973 (9,973) - 65,297
Depreciation and
amortization 40,509 5,611 1,180 - 47,300
Total assets 3,502,044 388,220 298,232 - 4,188,496
Goodwill 640,771 112,139 - - 752,910
Capital
expenditures 30,416 3,613 1,757 - 35,786
----------------------------------------------------------------------------
Completion
Contract and
Three months ended Drilling Production Corporate Inter-segment
September 30, 2009 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 216,391 $ 38,738 $ - $ (1,792) $ 253,337
Segment profit
(loss) 60,484 4,536 (9,659) - 55,361
Depreciation and
amortization 25,610 3,714 1,054 - 30,378
Total assets 3,721,044 399,172 240,645 - 4,360,861
Goodwill 660,060 112,139 - - 772,199
Capital
expenditures 11,862 501 1,835 - 14,198
----------------------------------------------------------------------------
Completion
Contract and
Nine months ended Drilling Production Corporate Inter-segment
September 30, 2010 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 845,515 $ 156,239 $ - $ (7,638) $ 994,116
Segment profit
(loss) 167,003 20,737 (30,034) - 157,706
Depreciation and
amortization 112,562 16,164 3,562 - 132,288
Total assets 3,502,044 388,220 298,232 - 4,188,496
Goodwill 640,771 112,139 - - 752,910
Capital
expenditures 55,090 6,246 3,617 - 64,953
----------------------------------------------------------------------------
Completion
Contract and
Nine months ended Drilling Production Corporate Inter-segment
September 30,2009 Services Services and Other Eliminations Total
----------------------------------------------------------------------------
Revenue $ 791,496 $ 127,303 $ - $ (7,420) $ 911,379
Segment profit
(loss) 221,536 17,411 (27,110) - 211,837
Depreciation and
amortization 87,007 12,405 3,137 - 102,549
Total assets 3,721,044 399,172 240,645 - 4,360,861
Goodwill 660,060 112,139 - - 772,199
Capital
expenditures 171,769 1,022 6,652 - 179,443
----------------------------------------------------------------------------
A reconciliation of segment profit to earnings before income taxes is as
follows:
Three months ended Nine months ended
(Stated in thousands of Canadian September 30, September 30,
dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Total segment profit $ 65,297 $ 55,361 $ 157,706 $ 211,837
Add (deduct):
Foreign exchange 18,003 63,486 11,670 105,055
Finance charges (21,848) (29,396) (102,819) (112,947)
----------------------------------------------------------------------------
Earnings before income taxes $ 61,452 $ 89,451 $ 66,557 $ 203,945
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Precision's operations are carried on in the following geographic locations:
Three months ended
September 30, United Inter-segment
2010 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 184,302 $ 168,759 $ 7,252 $ (1,161) $ 359,152
Total assets 1,702,228 2,428,838 57,430 - 4,188,496
----------------------------------------------------------------------------
Three months ended
September 30, United Inter-segment
2009 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 126,690 $ 120,872 $ 6,148 $ (373) $ 253,337
Total assets 1,671,133 2,632,495 57,233 - 4,360,861
----------------------------------------------------------------------------
Nine months ended
September 30, United Inter-segment
2010 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 517,434 $ 459,516 $ 19,671 $ (2,505) $ 994,116
Total assets 1,702,228 2,428,838 57,430 - 4,188,496
----------------------------------------------------------------------------
Nine months ended
September 30, United Inter-segment
2009 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 410,987 $ 484,747 $ 18,627 $ (2,982) $ 911,379
Total assets 1,671,133 2,632,495 57,233 - 4,360,861
----------------------------------------------------------------------------
THIRD QUARTER 2010 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, October 21, 2010.
The conference call dial in numbers are 1-877-440-9795 or
416-340-8527
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
October 28, 2010 by dialing 1-800-408-3053 or 416-695-5800, pass
code 3051552.
About Precision
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 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".
Contacts: Precision Drilling Corporation David Wehlmann
Executive Vice President, Investor Relations 403.716.4575
403.716.4755 (FAX) Precision Drilling Corporation 4200, 150 - 6th
Avenue S.W. Calgary, Alberta, Canada T2P 3Y7
www.precisiondrilling.com
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