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Precision Drilling beats expectations Add to ...

Precision Drilling Corp. reported better than expected third- quarter earnings on Thursday while forecasting continued strength in oil-focused activity in North America.

Canada's largest oil and gas driller said it earned $61-million in the three months ended Sept. 30, or about 21 cents per share - well ahead of the 9 cents per share analysts polled by Thomson Reuters had been expecting.

The company earned $72-million, or 25 cents per share, in the same quarter last year. Revenues increased to $359-million from $253-million.

Precision shares soared nearly 5.2 per cent to $7.91 on the Toronto Stock Exchange in morning trading.

About 60 per cent of Precision's drilling rigs have been hired to go after oil and natural gas liquids. Some 80 per cent are being used to drill complex horizontal or directional wells.

"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," chief executive officer Kevin Neveu said in a release.

That trend was evident during the summer, when Precision said it would bump up its capital spending to build new rigs and upgrade existing ones as demand grows for equipment capable of exploiting tough to access reservoirs.

Despite wet weather in the West this summer, the number of active rigs in Canada was 62 per cent higher than a year ago, driven by unconventional oil and gas drilling.

In the United States, there were 76 per cent more rigs at work than in the same 2009 period.

In contrast to the robust oil activity, natural gas prices have been abysmal lately. If those low prices persist, Precision said there could be a further pullback in gas drilling.

"However, we would expect most of these rigs to be absorbed by oil and natural gas liquids rich drilling activity," Mr. Neveu said.

With the demand for rig workers picking up, Precision raised wages for its Canadian personnel earlier this month. A wage increase south of the border is a possibility as well. Precision said it expects to recoup the increased cost by charging its customers more.

Earlier this month, the company took part in the dramatic rescue of 33 Chilean miners, who survived 69 days deep underground.

The company had a drill rig in the country, sitting idle and waiting for work, when part of the San Jose mine collapsed in August.

The Chilean government approached Precision to see if its rig could bore a hole wide enough and deep enough for the rescue operation. It was one of three firms trying to get at the trapped miners. In the end, it was another company's equipment that broke through first.

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