CALGARY, July 28 /CNW/ - Precision Drilling Corporation ("Precision" or
the "Corporation") announced today that net earnings for the second quarter of
2005 was $25.9 million or $0.21 per diluted share, compared to $16.0 million
or $0.14 per diluted share for the second quarter of 2004. Net earnings from
continuing operations was $9.3 million or $0.07 per diluted share compared to
$10.1 million or $0.09 per diluted share in 2004.
During the quarter, the Corporation entered into a definitive agreement
to sell its Energy Services and International Contract Drilling divisions for
approximately US$2.28 billion with the transaction expected to close on or
about September 1, 2005. The Corporation is also negotiating with a third
party for the sale of its industrial and plant maintenance business carried on
by CEDA. As a result, these businesses have been classified as discontinued
operations with continuing operations now being comprised of Canadian contract
drilling, service rig, snubbing, rentals, and related services businesses.
With respect to the continuing businesses, the Corporation announced in
June 2005 that it was undertaking an examination of the available strategic
alternatives, including determining the viability and method of conversion to
an income trust. Although the Board of Directors has not made any decision
with respect to any specific course of action at this time, it has retained
the appropriate financial, accounting, legal and tax advisors to assist it in
identifying and assessing issues pertaining to a conversion to an income
trust. Any conversion alternatives available to Precision will be subject to
review by, and approval of the Board of Directors and will also be subject to
receipt of all required shareholder and regulatory approvals.
Results of Continuing Operations
<<
Three Months Ended June 30,
2005 2004 % Change
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Number of drilling rigs (end of period) 229 225 1.8
Drilling operating days 6,049 5,279 14.6
Drilling revenue per operating day 16,578 15,561 6.5
Number of service rigs (end of period) 239 239 -
Service rig operating hours 72,814 80,986 (10.1)
Service revenue per operating hour 530 458 15.7
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Six Months Ended June 30,
2005 2004 % Change
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Number of drilling rigs (end of period) 229 225 1.8
Drilling operating days 20,048 20,047 -
Drilling revenue per operating day 17,951 16,506 8.7
Number of service rigs (end of period) 239 239 -
Service rig operating hours 212,488 231,679 (8.3)
Service revenue per operating hour 576 507 13.6
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As usual in the second quarter, weather conditions were a significant
factor affecting activity levels. An early spring break-up and dry conditions
in May were boding well for a very strong second quarter. These favorable
conditions came to an abrupt halt in June as record rainfall in Alberta slowed
the movement of oilfield equipment.
Demand for all services remains very strong with winter rates being
maintained for the most part throughout the second quarter. The healthy
backlog of work should give service providers pricing leverage going into the
upcoming winter season.
Operating costs have escalated somewhat as a result of crew wage
increases implemented in October 2004 and increases in third party materials
and labor required for our equipment maintenance programs. General and
administrative costs have increased year over year due to a number of factors
including increased expense associated with options granted in the last half
of 2004, financial advisory and legal fees, severance costs and additional
expenses related to both internal and external audit functions.
The effective tax rate has increased in 2005 as a result of the increased
options expense, which is not deductible for tax purposes, and as a result of
a tax law change in the second quarter that was effective January 1, 2005.
Certain statements contained in this press release may contain words such
as "anticipate", "could", "should", "expect", "believe", "will" and similar
expressions and statements relating to matters that are not historical facts.
These statements are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve known and
unknown risks and uncertainties which may cause the actual results,
performance or achievements of Precision to be materially different from any
future results, performances or achievements expressed or implied by such
forward-looking statements. Such factors include fluctuations in the market
for oil and gas and related products and services; competition; political and
economic conditions in countries in which Precision does business; the demand
for services provided by Precision; changes in laws and regulations, including
environmental regulations, to which Precision is subject and other factors,
which are described in further detail in Precision's filings with the US
Securities and Exchange Commission.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
CDN $000's, except Three Months Ended Six Months Ended
per share amounts June 30, June 30,
(unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
Revenue $ 157,895 $ 134,963 $ 541,302 $ 496,487
Expenses:
Operating 101,580 92,253 291,113 279,133
General and
administrative 20,215 12,031 40,009 31,009
Depreciation and
amortization 11,804 11,779 33,173 35,721
Foreign exchange (209) (5,165) (518) (5,011)
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133,390 110,898 363,777 340,852
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Operating earnings 24,505 24,065 177,525 155,635
Interest 10,802 10,257 22,341 18,201
Gain on disposal
of investments - (42) - (42)
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Earnings from
continuing operations
before income taxes 13,703 13,850 155,184 137,476
Income taxes:
Current 662 13,755 44,687 34,014
Future 3,733 (10,032) 12,908 12,908
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4,395 3,723 57,595 46,922
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Earnings from
continuing operations 9,308 10,127 97,589 90,554
Discontinued
operations, net of tax 16,543 5,868 66,780 25,960
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Net earnings 25,851 15,995 164,369 116,514
Retained earnings,
beginning of period 1,180,201 894,798 1,041,683 794,279
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Retained earnings,
end of period $ 1,206,052 $ 910,793 $ 1,206,052 $ 910,793
-------------------------------------------------------------------------
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Earnings per share
from continuing
operations:
Basic $ 0.08 $ 0.09 $ 0.80 $ 0.81
Diluted $ 0.07 $ 0.09 $ 0.78 $ 0.80
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Earnings per share:
Basic $ 0.21 $ 0.14 $ 1.34 $ 1.05
Diluted $ 0.21 $ 0.14 $ 1.32 $ 1.03
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Common shares
outstanding (000's) 122,762 111,817 122,762 111,817
Weighted average shares
outstanding (000's) 122,727 111,741 122,521 111,353
Diluted shares
outstanding (000's) 125,013 113,098 124,765 112,858
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
CDN $000's 2005 2004
-------------------------------------------------------------------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 306,538 $ 122,012
Accounts receivable 207,543 309,292
Income taxes recoverable 1,793 -
Inventory 6,711 7,734
Assets of discontinued operations 541,148 497,036
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1,063,733 936,074
Property, plant and equipment,
net of accumulated depreciation 927,592 897,584
Intangibles, net of accumulated amortization 511 498
Goodwill 266,827 266,827
Other assets 8,200 9,116
Assets of discontinued operations 1,742,143 1,741,950
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$ 4,009,006 $ 3,852,049
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 92,513 $ 120,432
Income taxes payable - 13,624
Liabilities of discontinued operations 234,511 244,727
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327,024 378,783
Long-term debt 719,240 718,850
Future income taxes 367,176 354,268
Future income taxes of discontinued operations 75,110 78,407
Shareholders' equity:
Share capital 1,301,886 1,274,967
Contributed surplus 33,631 26,024
Cumulative translation adjustment (21,113) (20,933)
Retained earnings 1,206,052 1,041,683
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2,520,456 2,321,741
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$ 4,009,006 $ 3,852,049
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Common shares outstanding (000's) 122,762 121,580
Common share purchase options outstanding (000's) 5,858 6,695
CONSOLIDATED STATEMENTS OF CASH FLOW
Three Months Ended Six Months Ended
June 30, June 30,
CDN $000's (unaudited) 2005 2004 2005 2004
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Cash provided by
(used in):
Continuing operations:
Earnings from
continuing
operations $ 9,308 $ 10,127 $ 97,589 $ 90,554
Items not
affecting cash:
Stock-based
compensation 2,684 1,414 5,464 2,943
Depreciation and
amortization 11,804 11,779 33,173 35,721
Gain on disposal
of investments - (42) - (42)
Future income taxes 3,733 (10,032) 12,908 12,908
Amortization of
deferred
financing costs 458 360 917 680
Unrealized foreign
exchange gain
on long-term
monetary items (14) (2,568) (3) (2,220)
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Funds provided
by continuing
operations 27,973 11,038 150,048 140,544
Changes in non-cash
working capital
balances 89,749 175,671 59,436 94,822
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117,722 186,709 209,484 235,366
Discontinued
operations:
Funds provided by
discontinued
operations 59,633 27,709 142,547 74,801
Changes in non-cash
working capital
balances of
discontinued
operations 28,880 (18,447) (48,264) (40,244)
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88,513 9,262 94,283 34,557
Investments:
Business acquisitions - (658,212) - (658,842)
Purchase of property,
plant and equipment (88,490) (55,253) (161,450) (108,981)
Purchase of intangibles - - (20) -
Proceeds on sale of
property, plant
and equipment 8,609 6,533 17,121 11,246
Proceeds on disposal
of investments - 48 - 48
Proceeds on disposal
of discontinued
operations - 15,000 - 40,746
Investments - (1,340) - (1,340)
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(79,881) (693,224) (144,349) (717,123)
Financing:
Increase in
long-term debt - 520,873 - 522,136
Repayment of
long-term debt (5) (6,898) (9) (11,263)
Deferred financing
costs on
long-term debt - (4,985) - (4,985)
Issuance of common
shares on exercise
of options 2,626 6,236 25,117 36,771
Change in
bank indebtedness - 2,533 - (76,114)
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2,621 517,759 25,108 466,545
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Increase in cash
and cash equivalents 128,975 20,506 184,526 19,345
Cash and cash
equivalents,
beginning of period 177,563 20,209 122,012 21,370
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Cash and cash
equivalents,
end of period $ 306,538 $ 40,715 $ 306,538 $ 40,715
-------------------------------------------------------------------------
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CANADIAN DRILLING OPERATING STATISTICS
For the Six Months Ended June 30,
2005 2004
-----------------------------------------------------------
Market Market
Precision Industry(x) Share % Precision Industry(x) Share %
-----------------------------------------------------------
Number of
drilling rigs 229 732 31.3 225 683 32.9
Number of
operating days
(spud to
release) 20,048 65,453 30.6 20,047 63,753 31.4
Wells drilled 3,504 10,126 34.6 3,530 9,964 35.4
Average days
per well 5.7 6.5 5.7 6.4
Metres drilled
(000's) 3,936 11,698 33.6 3,799 10,882 34.9
Average
metres/day 196 179 190 171
Average
metres/well 1,123 1,155 1,076 1,092
Rig
utilization
rate (%) 48.4 50.4 48.9 51.6
(x) Excludes non-CAODC rigs.
A conference call to review the second quarter 2005 results has been
scheduled for 12:00 noon MST on Thursday, July 28, 2005. The conference call
dial-in number is 1-800-814-4941.
A live webcast will be accessible at www.precisiondrilling.com by
selecting Investor Relations.
>>
%SEDAR: 00002052E
Precision Drilling Corporation announces results for the second quarter
Business
Jul 28 2005
4 min read