Precision Drilling profit slips, revenue steady

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Precision Drilling Corp. felt the pinch of weaker energy-sector spending and posted a net profit of $29-million, or 10 cents per share, in the third quarter, down from $39-million, or 14 cents, in the year-earlier period.

Revenue for the Calgary-based company – a major services provider to the oil and gas industry and considered a bellwether stock for the sector – was $488-million, one per cent higher than in the third quarter of 2012.

The company said increased international activity and higher average dayrates in Canadian contract drilling were significantly offset by weaker customer spending overall in North America.

Dayrates are contracts in which an agreed-upon daily amount is paid to the drilling contractor until a well is drilled to a predetermined depth.

Activity in the third quarter, as measured by drilling-rig utilization days, was off one per cent in Canada and 11 per cent in the United States, compared to the year-earlier period.

"Precision's third-quarter results reflect overall softness in customer demand and weak demand for Canadian completion and production services," Precision president and chief executive officer Kevin Neveu said in a news release Thursday.

"Additionally a non-recurring vendor issue and a difficult turnkey project weighed negatively on the quarter."

The company says it is reducing capital expenditures in 2013 by $45-million, to $609-million from the $654-million announced in July.

"Tempering these short term issues is Precision's resurgent activity levels in the U.S. where our current rig count is at 87, up seven, or 9 per cent, since the beginning of the third quarter, while overall industry activity levels have remained flat," said Mr. Neveu.

"In addition, our North American and international contract coverage has improved, with an expected average of 115 rigs under contract in the fourth quarter, compared to the second quarter of this year when an average of 107 rigs worked under contract."