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Workers tap deep into North Dakota's Bakken formation, on a Precision Drilling rig. (Nathan VanderKlippe/Nathan VanderKlippe/For The Globe and Mail)
Workers tap deep into North Dakota's Bakken formation, on a Precision Drilling rig. (Nathan VanderKlippe/Nathan VanderKlippe/For The Globe and Mail)

Precision Drilling swings to profit Add to ...

Precision Drilling Corp. swung to a fourth-quarter profit on increased oil-powered drilling in North America and plans to sign more contracts this year as the boom continues.

Canada’s No. 1 oil and gas driller handily beat Wall Street estimates, as rig daily rates jumped on high demand – which had also benefited peers such as Helmerich & Payne Inc.

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Precision’s revenue per utilization day averaged 18 per cent higher for rigs contracted in the United States while those in Canada saw a 16 per cent rise.

“We believe that [Precision’s]2012 consensus estimates will move higher on the better-than-expected day rates in both the U.S. and Canada,” Canaccord Genuity analysts John Tasdemir and Jason Bandel said in a note to clients.

Precision, which is running 274 rigs – about 75 per cent of them targeting oil wells – said it was in active discussions to sign up contracts for more rigs.

“We expect Precision’s solid results to continue in the first quarter as winter drilling season in Canada is off to a fast start and any producer cutback should wait until after spring break-up,” UBS analyst Chad Friess said in a note.

The Calgary-based company, which had ordered seven new rigs with long-term deals for two of them, said on Thursday it has signed contracts for three more.

New rigs with higher specification command better rates as they can be used in tougher conditions typical of oil drilling.

Precisions’s October-December net income was $28-million, or 10 cents per share, compared with a loss of $250,000, a year ago.

Revenue rose 35 per cent to $587-million.

The company’s adjusted earnings of 43 cents a share beat analysts’ estimates of 28 cents, according to Thomson Reuters I/B/E/S.

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