Precision Drilling Announces 2023 Second Quarter Unaudited Financial Results
CALGARY, Alberta, July 27, 2023 (GLOBE NEWSWIRE) -- 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. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending and Working Capital. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures used by other companies, see “Financial Measures and Ratios” later in this news release.
Precision Drilling announces 2023 second quarter financial results:
- Revenue was
$426 million compared with$326 million in the second quarter of 2022 as our drilling rigs continued to reprice at higher day rates, increasing25% in Canada and39% in the U.S. year over year. - Achieved second quarter Adjusted EBITDA(1) of
$142 million , significantly surpassing the$64 million reported in 2022. Adjusted EBITDA included idle but contracted rig revenue of US$5 million and share-based compensation of$3 million , compared with US$1 million and$5 million , respectively, in 2022. - Net earnings were
$27 million or$1.97 per share compared to a net loss of$25 million of$1.81 per share in 2022. - We continued to deliver High Performance, High Value service, expanding daily operating margins(2), maintaining strict cost control and scaling our Alpha™ digital technologies and EverGreen™ suite of environmental solutions across our Super Triple rig fleet, growing revenue from these offerings by over
60% from the second quarter of 2022. - Revenue per utilization day increased to
$33,535 in Canada and US$35,576 in the U.S., while daily operating margins were$12,203 in Canada and US$16,613 in the U.S. - We strengthened our contract book, signing take-or-pay term contracts with several new customers including large U.S. independents and major oil and gas companies and increasing fourth quarter rigs under take-or-pay term contracts in the U.S. from 18 to 27 and in Canada from 15 to 25.
- Averaged 42 active rigs in Canada, an increase of
12% over the second quarter of 2022, and 51 rigs in the U.S., representing an8% decline from the second quarter of 2022. - Generated
$213 million of cash from operations, repaid$178 million of debt, including all amounts drawn on our Senior Credit Facility and repurchased US$30 million of 2026 unsecured senior notes. Additionally, we returned$8 million to shareholders through share repurchases under our Normal Course Issuer Bid (NCIB). - As at June 30, 2023, we have reduced total debt by
$100 million since the beginning of the year and remain on track to meet our 2023 debt reduction target of at least$150 million . We remain committed to achieving a normalized Net Debt to Adjusted EBITDA(1) ratio of less than 1.0 times by the end of 2025. - Ended the quarter with
$23 million of cash and more than$575 million of available liquidity. - Completion and Production Services generated revenue of
$46 million and Adjusted EBITDA of$8 million , representing increases of40% and55% , respectively, from the second quarter of 2022. - Internationally, we have six rigs currently active in the Middle East, increasing to eight in the third quarter. These eight contracts are expected to generate stable predictable cash flow that will stretch into 2028.
(1) See “FINANCIAL MEASURES AND RATIOS.”
(2) Revenue per utilization day less operating costs per utilization day.
Precision’s President and CEO, Kevin Neveu, stated:
“We are pleased with our second quarter financial results, with revenue and Adjusted EBITDA of
“Our Canadian business continues to improve with healthy spring break-up activity due to increasing year-round pad drilling in the Montney and Clearwater formations. With imminent additions to hydrocarbon pipeline takeaway capacity, the outlook is certainly encouraging. Our Canadian fleet is in high demand with 58 rigs running, including all of our Super Triples and pad capable Super Singles. We expect customer demand for our Super Triple and Super Single pad capable fleets will continue to exceed supply well into 2024.
“In the U.S. we currently have 43 active rigs and two rigs on paid standby. Firm oil prices are supporting an improved customer outlook as demand for our Super Triple rigs is increasing and demonstrated by securing contracts for several rig reactivations later this quarter and into 2024. We believe long-term natural gas fundamentals are robust, despite short-term uncertainty experienced this year, as several Gulf Coast LNG export trains are due to come on stream in late 2024 and 2025.
“In the Middle East, we currently have six rigs running and expect to have eight rigs active before the end of the third quarter. With two new rig activations this year, our international operations are expected to provide incremental, stable, and predictable cash flow in 2024.
“Our High Performance, High Value services and our Super Series fleet, coupled with our Alpha™ digital technologies and EverGreen™ suite of environmental solutions, continue to underpin Precision’s earnings power. While our industry is susceptible to commodity price volatility, short-term industry cyclicality does not distract us from our business model or annual priorities. This includes our cash flow and debt reduction targets, which we have consistently met or exceeded, independent of the business cycle, and will continue to do so.
“I am confident that by remaining focused on our strategic priorities and what we can control, Precision will deliver increased shareholder value,” concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING INFORMATION
Financial Highlights
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
(Stated in thousands of Canadian dollars, except per share amounts) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||
Revenue | 425,622 | 326,016 | 30.6 | 984,229 | 677,355 | 45.3 | |||||||||||||||||
Adjusted EBITDA(1) | 142,093 | 64,099 | 121.7 | 345,312 | 100,954 | 242.0 | |||||||||||||||||
Net earnings (loss) | 26,900 | (24,611 | ) | (209.3 | ) | 122,730 | (68,455 | ) | (279.3 | ) | |||||||||||||
Cash provided by (used in) operations | 213,460 | 135,174 | 57.9 | 241,816 | 69,880 | 246.0 | |||||||||||||||||
Funds provided by operations(1) | 136,959 | 60,373 | 126.9 | 296,612 | 90,328 | 228.4 | |||||||||||||||||
Cash used in investing activities | 44,062 | 36,782 | 19.8 | 122,879 | 67,125 | 83.1 | |||||||||||||||||
Capital spending by spend category(1) | |||||||||||||||||||||||
Expansion and upgrade | 9,615 | 15,530 | (38.1 | ) | 25,960 | 25,145 | 3.2 | ||||||||||||||||
Maintenance and infrastructure | 35,099 | 23,906 | 46.8 | 69,549 | 50,693 | 37.2 | |||||||||||||||||
Proceeds on sale | (6,261 | ) | (6,849 | ) | (8.6 | ) | (14,026 | ) | (9,696 | ) | 44.7 | ||||||||||||
Net capital spending(1) | 38,453 | 32,587 | 18.0 | 81,483 | 66,142 | 23.2 | |||||||||||||||||
Net earnings (loss) per share: | |||||||||||||||||||||||
Basic | 1.97 | (1.81 | ) | (208.8 | ) | 8.98 | (5.06 | ) | (277.5 | ) | |||||||||||||
Diluted | 1.63 | (1.81 | ) | (190.1 | ) | 7.22 | (5.06 | ) | (242.7 | ) |
(1) See “FINANCIAL MEASURES AND RATIOS.”
Operating Highlights
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
Contract drilling rig fleet | 225 | 226 | (0.4 | ) | 225 | 226 | (0.4 | ) | |||||||||||||||
Drilling rig utilization days: | |||||||||||||||||||||||
U.S. | 4,626 | 5,037 | (8.2 | ) | 10,008 | 9,627 | 4.0 | ||||||||||||||||
Canada | 3,795 | 3,376 | 12.4 | 9,963 | 9,029 | 10.3 | |||||||||||||||||
International | 452 | 546 | (17.2 | ) | 885 | 1,086 | (18.5 | ) | |||||||||||||||
Revenue per utilization day: | |||||||||||||||||||||||
U.S. (US$) | 35,576 | 25,547 | 39.3 | 35,247 | 24,951 | 41.3 | |||||||||||||||||
Canada (Cdn$) | 33,535 | 26,746 | 25.4 | 32,773 | 25,192 | 30.1 | |||||||||||||||||
International (US$) | 50,551 | 54,612 | (7.4 | ) | 51,139 | 52,436 | (2.5 | ) | |||||||||||||||
Operating costs per utilization day: | |||||||||||||||||||||||
U.S. (US$) | 18,963 | 18,864 | 0.5 | 19,667 | 18,628 | 5.6 | |||||||||||||||||
Canada (Cdn$) | 21,332 | 19,010 | 12.2 | 19,731 | 16,749 | 17.8 | |||||||||||||||||
Service rig fleet | 119 | 93 | 28.0 | 119 | 93 | 28.0 | |||||||||||||||||
Service rig operating hours | 39,709 | 30,389 | 30.7 | 98,050 | 68,654 | 42.8 |
Financial Position
(Stated in thousands of Canadian dollars, except ratios) | June 30, 2023 | December 31, 2022 | |||||
Working capital(1) | 134,839 | 60,641 | |||||
Cash | 22,919 | 21,587 | |||||
Long-term debt | 964,103 | 1,085,970 | |||||
Total long-term financial liabilities | 1,042,188 | 1,206,619 | |||||
Total assets | 2,732,694 | 2,876,123 | |||||
Long-term debt to long-term debt plus equity ratio (1) | 0.42 | 0.47 |
(1) See “FINANCIAL MEASURES AND RATIOS.”
Summary for the three months ended June 30, 2023:
- Revenue of
$426 million was31% higher than 2022 due to the further strengthening of North American drilling and service revenue rates, partially offset by lower U.S. and international activity. Drilling rig utilization days increased12% in Canada, while U.S. and international activity decreased by8% and17% , respectively. Our service rig operating hours increased31% to 39,709 hours as compared with 2022. - Adjusted EBITDA was
$142 million ,$78 million higher than 2022 due to increased North America revenue rates, continued strict cost control and lower share-based compensation. Share-based compensation was$3 million as compared with$5 million in 2022. Please refer to “Other Items” later in this news release for additional information on share-based compensation charges. - Adjusted EBITDA as a percentage of revenue was
33% as compared with20% in 2022. - Our U.S. revenue per utilization day was US
$35,576 compared with US$25,547 in 2022. The increase was primarily the result of higher fleet average day rates and higher idle but contracted rig revenue, offset by lower turnkey activity. We recognized revenue from idle but contracted rigs and turnkey projects of US$5 million and nil, respectively as compared with US$1 million and US$9 million in 2022. Revenue per utilization day, excluding the impact of idle but contracted rigs and turnkey projects was US$34,396 , compared to US$23,590 in 2022, an increase of US$10,806 or46% . Revenue per utilization day, excluding idle but contracted rigs and turnkey revenue, increased US$796 from the first quarter of 2023. - Our U.S. operating costs per utilization day increased slightly to US
$18,963 compared with US$18,864 in 2022. The increase was primarily due to higher rig operating costs offset by lower turnkey costs. Operating costs per utilization day, excluding turnkey activity, were US$18,941 compared with US$16,517 in 2022. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day decreased US$458. - In Canada, revenue per utilization day was
$33,535 compared with$26,746 in 2022. The increase was a result of higher average day rates and customer cost recoveries. Sequentially, revenue per utilization day increased$1,231 due to rig mix. - Our Canadian operating costs per utilization day increased to
$21,332 , compared with$19,010 in 2022, due to higher field wages and costs that were recovered from our customers. Sequentially, our daily operating costs increased$2,586 due to higher repairs and maintenance costs spread over fewer activity days and rig mix. - Completion and Production Services revenue and Adjusted EBITDA were
$46 million and$8 million , respectively, compared with$33 million and$5 million in 2022. - We realized US
$23 million of international contract drilling revenue compared with US$30 million in 2022. - General and administrative expenses were
$23 million as compared with$21 million in 2022. The increase was primarily due to higher labour-related costs and the impact of the weakening Canadian dollar on our translated U.S. dollar-denominated costs. - Net finance charges were
$21 million , consistent with 2022. - Cash provided by operations was
$213 million compared with$135 million in 2022. We generated$137 million of funds provided by operations compared with$60 million in 2022. Our increased day rates, revenue efficiency and operational leverage contributed to higher cash generation in the current quarter. - Capital expenditures were
$45 million compared with$39 million in 2022. Capital spending by spend category (see “FINANCIAL MEASURES AND RATIOS”) included$10 million for expansion and upgrades and$35 million for the maintenance of existing assets, infrastructure, and intangible assets. - Repaid
$178 million of debt, including all amounts drawn on our Senior Credit Facility and repurchased US$30 million of 2026 unsecured senior notes. Additionally, we returned$8 million to shareholders through share repurchases under our NCIB. - We ended the quarter with
$23 million of cash and more than$575 million of available liquidity. - Subsequent to June 30, 2023, we completed our
$5 million equity investment in CleanDesign Income Corp. (CleanDesign). CleanDesign is a key supplier of Precision’s EverGreen™ Battery Energy Storage Systems (BESS) and this investment provides access to key BESS and power management technologies.
Summary for the six months ended June 30, 2023:
- Revenue for the first six months of 2023 was
$984 million , an increase of45% from 2022. - Adjusted EBITDA for the period was
$345 million as compared with$101 million in 2022. Our higher Adjusted EBITDA was attributable to increased North American drilling and service activity, strengthening of day rates and lower share-based compensation charges. - General and administrative costs were
$39 million , a decrease of$38 million from 2022 primarily due to lower share-based compensation charges, partially offset by higher labour related costs and the impact of the weakening Canadian dollar on our translated U.S. dollar-denominated costs. - Net finance charges were
$44 million , an increase of$3 million from 2022 due to the impact of the weakening of the Canadian dollar on our U.S. dollar-denominated interest expense. - Cash provided by operations was
$242 million as compared with$70 million in 2022. Funds provided by operations in 2023 were$297 million , an increase of$206 million from the comparative period. - Capital expenditures were
$96 million in 2023, an increase of$20 million from 2022. Capital spending by spend category included$26 million for expansion and upgrades and$70 million for the maintenance of existing assets, infrastructure, and intangible assets. - Year-to-date, we have reduced our total debt by
$100 million through the full repayment of our Senior Credit Facility and the repurchase of US$30 million of our 2026 unsecured senior notes. In addition, we repurchased and canceled 193,616 common shares for$13 million under our NCIB.
STRATEGY
Precision’s vision is to be globally recognized as the High Performance, High Value provider of land drilling services. We work toward this vision by defining and measuring our results against strategic priorities that we establish at the beginning of every year.
Precision’s 2023 strategic priorities and the progress made during the second quarter are as follows:
- Deliver High Performance, High Value service through operational excellence.
- Grew our average active rig count by
12% in Canada as compared with the same period last year. - Increased service rig operating hours
31% over the second quarter of 2022. With the successful integration of High Arctic Inc.’s well servicing business, Precision is now the leading provider of high-quality and reliable services in Canada. - Reinvested
$45 million into our equipment and infrastructure, bringing our year-to-date investment to$96 million as we progress toward our total expected 2023 investment of$195 million .
- Grew our average active rig count by
- Maximize free cash flow by increasing Adjusted EBITDA margins, revenue efficiency, and growing revenue from Alpha™ technologies and EverGreen™ suite of environmental solutions.
- Realized second quarter daily operating margins of
$12,203 in Canada and US$16,613 in the U.S., representing increases of58% and149% , respectively, compared with 2022. - Grew combined Alpha™ technologies and EverGreen™ suite of environmental solutions second quarter revenue by over
60% compared with 2022. - Ended the quarter with 73 of our AC Super Triple rigs equipped with Alpha™ technologies, representing a
38% increase over the same quarter last year. - Continued to scale our EverGreen™ suite of environmental solutions, adding one EverGreen™ BESS, two EverGreen™ Integrated Power and Emissions Monitoring Systems and 14 high mast LED lighting systems to our fleet during the quarter.
- Realized second quarter daily operating margins of
- Reduce debt by at least
$150 million and allocate10% to20% of free cash flow before debt repayments for share repurchases. Long-term debt reduction target of$500 million between 2022 and 2025 and sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times by the end of 2025.- Generated significant second quarter cash from operations of
$213 million which allowed us to reduce debt by$178 million during the quarter, including the full repayment of our Senior Credit Facility and the repurchase of US$30 million of 2026 unsecured senior notes. - Returned
$8 million of capital to shareholders by repurchasing and cancelling 126,543 common shares. For the first six months of the year, we have allocated$13 million of free cash flow to share repurchases. - For the first six months of the year, we have reduced total debt by
$100 million . We remain committed to reducing debt by at least$150 million in 2023 and expect to reach a Net Debt to Adjusted EBITDA ratio of between 1.25 and 1.50 times by year end.
- Generated significant second quarter cash from operations of
OUTLOOK
Energy industry fundamentals continue to support drilling activity for oil and natural gas despite broad economic concerns and geopolitical instability. Oil prices are supported by demand growth reemerging in China, while OPEC cutting production quotas and years of under investment and capital discipline by producers have limited supply growth. We therefore expect drilling activity to improve in the second half of the year as customers seek to generate appropriate investment returns, maintain production levels and replenish inventories. Natural gas has demonstrated short-term price weaknesses, however, this lower-carbon energy source is becoming increasingly favorable as countries around the world stress the importance of sustainability, decarbonization and energy security. With demand for Liquified Natural Gas (LNG) exports growing and the next wave of North America LNG projects expected to begin coming online in 2025 (including LNG Canada), we anticipate a sustained period of elevated natural gas drilling activity in both the U.S. and Canada.
In Canada, Precision’s activity is expected to continue to surpass 2022 levels, supported by imminent hydrocarbon export capacity increases with the Trans Mountain oil pipeline and the Coastal GasLink pipeline, each expected to begin operations in early 2024. Northwestern Alberta and northeastern British Columbia natural gas developments are prime beneficiaries of the LNG Canada project and the January 2023 agreement between the British Columbia government and the Blueberry River First Nation has facilitated a significant increase in 2023 drilling license approvals, which should lead to more drilling activity in the region. Large pad drilling programs are ideally suited for Super Triple drilling rigs, resulting in strong customer interest for these rigs for the next several years. Our Super Triple fleet is currently fully utilized and we expect customer demand to continue to exceed supply, driving higher daily operating margins and longer-term take-or-pay contracts.
On the heavy oil side, we expect activity levels to remain strong as Canadian producers are benefitting from a favorable U.S. exchange rate and a significantly reduced heavy oil differential. Precision’s Super Single rigs are well suited for long-term conventional heavy oil development in the oil sands and Clearwater formation. Looking at the second half of the year, we expect our Super Single pad capable rigs to be fully utilized, driving higher day rates.
In the U.S., drilling activity had been increasing since mid-2020 but began to weaken in early 2023 due to lower natural gas prices and uncertain oil prices. For the first six months of the year, the Baker Hughes’ U.S. land rig count declined
Our Alpha™ technologies and EverGreen™ suite of environmental solutions continue to gain momentum and have become key competitive differentiators for our rigs as these offerings deliver exceptional value to our customers by reducing risks, well construction costs and carbon footprint. We currently have 10 EverGreen™ BESS deployed in the field and have commitments for three additional deployments in the second half of the year. Precision’s EverGreen™ BESS has proven to be an economically viable emissions reduction solution for our customers and we anticipate continued demand for additional deployments through the remainder of the year. In April, we expanded our partnership with CleanDesign, a key supplier of EverGreen™ BESS, through a
Internationally, we currently have six rigs working on term contracts, three in Kuwait and three in the Kingdom of Saudi Arabia, increasing to eight before the end of the third quarter. These eight rig contracts provide stable and predictable cash flow and represent over
With the successful acquisition of High Arctic’s well servicing business in July 2022, Precision is now the leading provider of high-quality and reliable well services in Canada and the outlook for this business is positive. Customer demand for maintenance and completion activity is expected to exceed staffed service rigs available, supporting healthy activity and strong pricing into the foreseeable future.
Contracts
The following chart outlines the average number of drilling rigs under term contract by quarter as at July 26, 2023. For those quarters ending after June 30, 2023, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts.
Average for the quarter ended 2022 | Average for the quarter ended 2023 | |||||||||||||||||||||||||
Mar. 31 | June 30 | Sept. 30 | Dec. 31 | Mar. 31 | June 30 | Sept. 30 | Dec. 31 | |||||||||||||||||||
Average rigs under term contract as of July 26, 2023: | ||||||||||||||||||||||||||
U.S. | 27 | 29 | 31 | 35 | 40 | 37 | 31 | 27 | ||||||||||||||||||
Canada | 6 | 8 | 10 | 16 | 19 | 23 | 29 | 25 | ||||||||||||||||||
International | 6 | 6 | 6 | 6 | 4 | 5 | 7 | 8 | ||||||||||||||||||
Total | 39 | 43 | 47 | 57 | 63 | 65 | 67 | 60 |
The following chart outlines the average number of drilling rigs that we had under term contract for 2022 and the average number of rigs we have under term contract as at July 26, 2023.
Average for the year ended | |||||||
2022 | 2023 | ||||||
Average rigs under term contract as of July 26, 2023: | |||||||
U.S. | 31 | 34 | |||||
Canada | 10 | 24 | |||||
International | 6 | 6 | |||||
Total | 47 | 64 |
In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year. Internationally, we expect to have eight rigs under long-term contract beginning in the second half of 2023.
Drilling Activity
The following chart outlines the average number of drilling rigs that we had working or moving by quarter for the periods noted.
Average for the quarter ended 2022 | Average for the quarter ended 2023 | ||||||||||||||||||||||
Mar. 31 | June 30 | Sept. 30 | Dec. 31 | Mar. 31 | June 30 | ||||||||||||||||||
Average Precision active rig count: | |||||||||||||||||||||||
U.S. | 51 | 55 | 57 | 60 | 60 | 51 | |||||||||||||||||
Canada | 63 | 37 | 59 | 66 | 69 | 42 | |||||||||||||||||
International | 6 | 6 | 6 | 6 | 5 | 5 | |||||||||||||||||
Total | 120 | 98 | 122 | 132 | 134 | 98 |
According to industry sources, as at July 26, 2023, the U.S. active land drilling rig count has decreased
Capital Spending and Free Cash Flow Allocation
We remain committed to disciplined cash flow management, capital spending and returning capital to shareholders. Capital spending in 2023 is expected to be
SEGMENTED FINANCIAL RESULTS
Precision’s operations are reported in two segments: Contract Drilling Services, which includes our drilling rig, oilfield supply and manufacturing divisions; and Completion and Production Services, which includes our service rig, rental and camp and catering divisions.
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||
Revenue: | |||||||||||||||||||||||
Contract Drilling Services | 380,958 | 294,299 | 29.4 | 867,034 | 608,444 | 42.5 | |||||||||||||||||
Completion and Production Services | 46,161 | 33,041 | 39.7 | 120,684 | 71,279 | 69.3 | |||||||||||||||||
Inter-segment eliminations | (1,497 | ) | (1,324 | ) | 13.1 | (3,489 | ) | (2,368 | ) | 47.3 | |||||||||||||
425,622 | 326,016 | 30.6 | 984,229 | 677,355 | 45.3 | ||||||||||||||||||
Adjusted EBITDA:(1) | |||||||||||||||||||||||
Contract Drilling Services | 147,478 | 70,429 | 109.4 | 336,601 | 141,603 | 137.7 | |||||||||||||||||
Completion and Production Services | 7,507 | 4,839 | 55.1 | 24,913 | 11,378 | 119.0 | |||||||||||||||||
Corporate and Other | (12,892 | ) | (11,169 | ) | 15.4 | (16,202 | ) | (52,027 | ) | (68.9 | ) | ||||||||||||
142,093 | 64,099 | 121.7 | 345,312 | 100,954 | 242.0 |
(1) See “FINANCIAL MEASURES AND RATIOS.”
SEGMENT REVIEW OF CONTRACT DRILLING SERVICES
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
(Stated in thousands of Canadian dollars, except where noted) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||
Revenue | 380,958 | 294,299 | 29.4 | 867,034 | 608,444 | 42.5 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Operating | 224,746 | 215,676 | 4.2 | 511,813 | 445,727 | 14.8 | |||||||||||||||||
General and administrative | 8,734 | 8,194 | 6.6 | 18,620 | 21,114 | (11.8 | ) | ||||||||||||||||
Adjusted EBITDA(1) | 147,478 | 70,429 | 109.4 | 336,601 | 141,603 | 137.7 | |||||||||||||||||
Adjusted EBITDA as a percentage of revenue(1) | 38.7 | % | 23.9 | % | 38.8 | % | 23.3 | % |
(1) See “FINANCIAL MEASURES AND RATIOS.”
United States onshore drilling statistics:(1) | 2023 | 2022 | |||||||||||||
Precision | Industry(2) | Precision | Industry(2) | ||||||||||||
Average number of active land rigs for quarters ended: | |||||||||||||||
March 31 | 60 | 744 | 51 | 603 | |||||||||||
June 30 | 51 | 700 | 55 | 687 | |||||||||||
Year to date average | 55 | 722 | 53 | 645 |
(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.
Canadian onshore drilling statistics:(1) | 2023 | 2022 | |||||||||||||
Precision | Industry(2) | Precision | Industry(2) | ||||||||||||
Average number of active land rigs for quarters ended: | |||||||||||||||
March 31 | 69 | 221 | 63 | 205 | |||||||||||
June 30 | 42 | 117 | 37 | 113 | |||||||||||
Year to date average | 55 | 169 | 50 | 159 |
(1) Canadian operations only.
(2) Baker Hughes rig counts.
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
(Stated in thousands of Canadian dollars, except where noted) | 2023 | 2022 | % Change | 2023 | 2022 | ||||||||||||||||||
Revenue | 46,161 | 33,041 | 39.7 | 120,684 | 71,279 | 69.3 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Operating | 36,921 | 26,200 | 40.9 | 91,713 | 56,167 | 63.3 | |||||||||||||||||
General and administrative | 1,733 | 2,002 | (13.4 | ) | 4,058 | 3,734 | 8.7 | ||||||||||||||||
Adjusted EBITDA(1) | 7,507 | 4,839 | 55.1 | 24,913 | 11,378 | 119.0 | |||||||||||||||||
Adjusted EBITDA as a percentage of revenue(1) | 16.3 | % | 14.6 | % | 20.6 | % | 16.0 | % | |||||||||||||||
Well servicing statistics: | |||||||||||||||||||||||
Number of service rigs (end of period) | 119 | 93 | 28.0 | 119 | 93 | 28.0 | |||||||||||||||||
Service rig operating hours | 39,709 | 30,389 | 30.7 | 98,050 | 68,654 | 42.8 | |||||||||||||||||
Service rig operating hour utilization | 37 | % | 36 | % | 46 | % | 41 | % |
(1) See “FINANCIAL MEASURES AND RATIOS.”
SEGMENT REVIEW OF CORPORATE AND OTHER
Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had negative Adjusted EBITDA of
OTHER ITEMS
Share-based Incentive Compensation Plans
We have several cash and equity-settled share-based incentive plans for non-management directors, officers, and other eligible employees. Our accounting policies for each share-based incentive plan can be found in our 2022 Annual Report.
A summary of expense amounts under these plans during the reporting periods are as follows:
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Cash settled share-based incentive plans | 2,081 | 5,048 | (10,014 | ) | 52,259 | ||||||||||
Equity settled share-based incentive plans | 653 | — | 1,133 | 427 | |||||||||||
Total share-based incentive compensation plan expense (recovery) | 2,734 | 5,048 | (8,881 | ) | 52,686 | ||||||||||
Allocated: | |||||||||||||||
Operating | 923 | 1,852 | (960 | ) | 12,772 | ||||||||||
General and Administrative | 1,811 | 3,196 | (7,921 | ) | 39,914 | ||||||||||
2,734 | 5,048 | (8,881 | ) | 52,686 |
Cash settled share-based compensation expense for the quarter was
During the first quarter of 2023, we issued Executive Restricted Share Units (Executive RSUs) to certain senior executives. Accordingly, our equity-settled share-based compensation expense for the quarter was
As at June 30, 2023, the majority of our share-based compensation plans were classified as cash-settled and will be impacted by changes in our share price. Although accounted for as cash-settled, Precision retains the ability to settle certain vested units in common shares at its discretion.
Finance Charges
Finance charges were
Income Tax
Income tax expense for the quarter was
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Amount | Availability | Used for | Maturity | |||
Senior Credit Facility (secured) | ||||||
US | Nil drawn and US | General corporate purposes | June 18, 2025 | |||
Real estate credit facilities (secured) | ||||||
US | Fully drawn | General corporate purposes | November 19, 2025 | |||
Fully drawn | General corporate purposes | March 16, 2026 | ||||
Operating facilities (secured) | ||||||
Undrawn, except | Letters of credit and general corporate purposes | |||||
US | Undrawn | Short-term working capital requirements | ||||
Demand letter of credit facility (secured) | ||||||
US | Undrawn, except US | Letters of credit | ||||
Unsecured senior notes (unsecured) | ||||||
US | Fully drawn | Debt redemption and repurchases | January 15, 2026 | |||
US | Fully drawn | Debt redemption and repurchases | January 15, 2029 |
As at June 30, 2023, we had
During the quarter, we repaid all amounts borrowed under our Senior Credit Facility and repurchased and cancelled US
During the quarter, S&P Global Ratings raised our issuer credit rating and rating on our Unsecured Senior Notes to ‘B+’ from ‘B’. In addition, Moody’s Investor Service upgraded Precision’s corporate rating to B1 from B2 and unsecured senior notes rating to B2 from B3.
Senior Credit Facility
Our Senior Credit Facility requires that we comply with certain covenants including a leverage ratio of consolidated senior debt to consolidated Covenant EBITDA of less than 2.5:1. For purposes of calculating the leverage ratio, consolidated senior debt only includes secured indebtedness. The Senior Credit Facility limits the redemption and repurchase of junior debt subject to a pro forma senior net leverage covenant test of less than or equal to 1.75:1.
During the quarter, we agreed with the lenders of our Senior Credit Facility to remove certain non-extending lenders from our facility, thereby reducing the total commitment from US
The Senior Credit Facility matures on June 18, 2025.
Covenants
As at June 30, 2023, we were in compliance with the covenants of our Senior Credit Facility and Real Estate Credit Facilities.
Covenant | At June 30, 2023 | ||||
Senior Credit Facility | |||||
Consolidated senior debt to consolidated covenant EBITDA(1)h | < 2.50 | 0.05 | |||
Consolidated covenant EBITDA to consolidated interest expense | > 2.50 | 6.30 | |||
Real Estate Credit Facilities | |||||
Consolidated covenant EBITDA to consolidated interest expense | > 2.50 | 6.30 |
(1) For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness.
Average shares outstanding
The following tables reconcile net earnings (loss) and the weighted average shares outstanding used in computing basic and diluted net earnings (loss) per share:
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net earnings (loss) - basic | 26,900 | (24,611 | ) | 122,730 | (68,455 | ) | |||||||||
Effect of share options and other equity compensation plans | (2,902 | ) | — | (15,469 | ) | — | |||||||||
Net earnings (loss) - diluted | 23,998 | (24,611 | ) | 107,261 | (68,455 | ) |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(Stated in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Weighted average shares outstanding – basic | 13,672 | 13,588 | 13,661 | 13,533 | |||||||||||
Effect of share options and other equity compensation plans | 1,075 | — | 1,196 | — | |||||||||||
Weighted average shares outstanding – diluted | 14,747 | 13,588 | 14,857 | 13,533 |
QUARTERLY FINANCIAL SUMMARY
(Stated in thousands of Canadian dollars, except per share amounts) | 2022 | 2023 | ||||||||||||||
Quarters ended | September 30 | December 31 | March 31 | June 30 | ||||||||||||
Revenue | 429,335 | 510,504 | 558,607 | 425,622 | ||||||||||||
Adjusted EBITDA(1) | 119,561 | 91,090 | 203,219 | 142,093 | ||||||||||||
Net earnings (loss) | 30,679 | 3,483 | 95,830 | 26,900 | ||||||||||||
Net earnings (loss) per basic share | 2.26 | 0.27 | 7.02 | 1.97 | ||||||||||||
Net earnings (loss) per diluted share | 2.03 | 0.27 | 5.57 | 1.63 | ||||||||||||
Funds provided by operations(1) | 81,327 | 111,339 | 159,653 | 136,959 | ||||||||||||
Cash provided by operations | 8,142 | 159,082 | 28,356 | 213,460 |
(Stated in thousands of Canadian dollars, except per share amounts) | 2021 | 2022 | ||||||||||||||
Quarters ended | September 30 | December 31 | March 31 | June 30 | ||||||||||||
Revenue | 253,813 | 295,202 | 351,339 | 326,016 | ||||||||||||
Adjusted EBITDA(1) | 45,408 | 63,881 | 36,855 | 64,099 | ||||||||||||
Net loss | (38,032 | ) | (27,336 | ) | (43,844 | ) | (24,611 | ) | ||||||||
Net loss per basic and diluted share | (2.86 | ) | (2.05 | ) | (3.25 | ) | (1.81 | ) | ||||||||
Funds provided by operations(1) | 33,525 | 62,681 | 29,955 | 60,373 | ||||||||||||
Cash provided by (used in) operations | 21,871 | 59,713 | (65,294 | ) | 135,174 |
(1) See “FINANCIAL MEASURES AND RATIOS.”
FINANCIAL MEASURES AND RATIOS
Non-GAAP Financial Measures | |
We reference certain additional Non-Generally Accepted Accounting Principles (Non-GAAP) measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors. | |
Adjusted EBITDA | We believe Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings (Loss) and our reportable operating segment disclosures, is a useful measure because it gives an indication of the results from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges. The most directly comparable financial measure is net earnings (loss). |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Adjusted EBITDA by segment: | |||||||||||||||
Contract Drilling Services | 147,478 | 70,429 | 336,601 | 141,603 | |||||||||||
Completion and Production Services | 7,507 | 4,839 | 24,913 | 11,378 | |||||||||||
Corporate and Other | (12,892 | ) | (11,169 | ) | (16,202 | ) | (52,027 | ) | |||||||
Adjusted EBITDA | 142,093 | 64,099 | 345,312 | 100,954 | |||||||||||
Depreciation and amortization | 74,088 | 69,757 | 145,631 | 138,214 | |||||||||||
Gain on asset disposals | (3,872 | ) | (10,800 | ) | (13,148 | ) | (13,914 | ) | |||||||
Foreign exchange | (774 | ) | 536 | (1,257 | ) | 18 | |||||||||
Finance charges | 21,408 | 21,043 | 44,328 | 41,773 | |||||||||||
Gain on repurchase of unsecured notes | (100 | ) | — | (100 | ) | — | |||||||||
Loss (gain) on investments and other assets | 5,658 | 4,346 | 9,888 | (1,223 | ) | ||||||||||
Incomes taxes | 18,785 | 3,828 | 37,240 | 4,541 | |||||||||||
Net earnings (loss) | 26,900 | (24,611 | ) | 122,730 | (68,455 | ) |
Funds Provided by (Used in) Operations | We believe funds provided by (used in) operations, as reported in our Condensed Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital changes, which is primarily made up of highly liquid balances. The most directly comparable financial measure is cash provided by (used in) operations. |
Net Capital Spending | We believe net capital spending is a useful measure as it provides an indication of our primary investment activities. The most directly comparable financial measure is cash provided by (used in) investing activities. Net capital spending is calculated as follows: |
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Capital spending by spend category | ||||||||||||||||
Expansion and upgrade | 9,615 | 15,530 | 25,960 | 25,145 | ||||||||||||
Maintenance, infrastructure and intangibles | 35,099 | 23,906 | 69,549 | 50,693 | ||||||||||||
44,714 | 39,436 | 95,509 | 75,838 | |||||||||||||
Proceeds on sale of property, plant and equipment | (6,261 | ) | (6,849 | ) | (14,026 | ) | (9,696 | ) | ||||||||
Net capital spending | 38,453 | 32,587 | 81,483 | 66,142 | ||||||||||||
Business acquisitions | — | — | 28,000 | — | ||||||||||||
Purchase of investments and other assets | 2,016 | 536 | 2,071 | 536 | ||||||||||||
Changes in non-cash working capital balances | 3,593 | 3,659 | 11,325 | 447 | ||||||||||||
Cash used in investing activities | 44,062 | 36,782 | 122,879 | 67,125 |
Working Capital | We define working capital as current assets less current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position. Working capital is calculated as follows: |
June 30, | December 31, | ||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | |||||
Current assets | 413,091 | 470,670 | |||||
Current liabilities | 278,252 | 410,029 | |||||
Working capital | 134,839 | 60,641 |
Non-GAAP Ratios | |
We reference certain additional Non-GAAP ratios that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors. | |
Adjusted EBITDA % of Revenue | We believe Adjusted EBITDA as a percentage of consolidated revenue, as reported in our Condensed Interim Consolidated Statements of Net Loss, provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges. |
Long-term debt to long-term debt plus equity | We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total shareholders’ equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage. |
Net Debt to Adjusted EBITDA | We believe that the Net Debt (long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations. |
Supplementary Financial Measures | |
We reference certain supplementary financial measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors. | |
Capital Spending by Spend Category | We provide additional disclosure to better depict the nature of our capital spending. Our capital spending is categorized as expansion and upgrade, maintenance and infrastructure, or intangibles. |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements contained in this release, including statements that contain words such as "could", "should", "can", "anticipate", "estimate", "intend", "plan", "expect", "believe", "will", "may", "continue", "project", "potential" 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:
- our strategic priorities for 2023;
- our capital expenditures, free cash flow allocation and debt reduction plan for 2023;
- anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2023;
- the average number of term contracts in place for 2023;
- customer adoption of Alpha™ technologies and EverGreen™ suite of environmental solutions;
- timing and amount of costs savings from acquired well servicing and rental assets;
- potential commercial opportunities and rig contract renewals; and
- our future debt reduction plans.
These forward-looking information and statements are based on certain assumptions and analysis made by Precision in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. These include, among other things:
- our ability to react to customer spending plans as a result of changes in oil and natural gas prices;
- the status of current negotiations with our customers and vendors;
- customer focus on safety performance;
- existing term contracts are neither renewed nor terminated prematurely;
- our ability to deliver rigs to customers on a timely basis;
- the impact of an increase/decrease in capital spending; and
- the general stability of the economic and political environments in the jurisdictions where we operate.
Undue reliance should not be placed on forward-looking information and statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks and uncertainties include, but are not limited to:
- volatility 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;
- our customers’ inability to obtain adequate credit or financing to support their drilling and production activity;
- the success of vaccinations for COVID-19 worldwide;
- changes in drilling and well servicing technology, which could reduce demand for certain rigs or put us at a competitive advantage;
- shortages, delays and interruptions in the delivery of equipment supplies and other key inputs;
- liquidity of the capital markets to fund customer drilling programs;
- availability of cash flow, debt and equity sources to fund our capital and operating requirements, as needed;
- the impact of weather and seasonal conditions on operations and facilities;
- competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services;
- ability to improve our rig technology to improve drilling efficiency;
- general economic, market or business conditions;
- the availability of qualified personnel and management;
- a decline in our safety performance which could result in lower demand for our services;
- changes in laws or regulations, including changes in environmental laws and regulations such as increased regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and greenhouse gas emissions, which could have an adverse impact on the demand for oil and natural gas;
- terrorism, social, civil and political unrest in the foreign jurisdictions where we operate;
- fluctuations in foreign exchange, interest rates and tax rates; and
- other unforeseen conditions which could impact the use of services supplied by Precision and Precision’s ability to respond to such conditions.
Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2022, which may be accessed on Precision’s SEDAR profile at www.sedar.com or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this release are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(Stated in thousands of Canadian dollars) | June 30, 2023 | December 31, 2022 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 22,919 | $ | 21,587 | ||||
Accounts receivable | 353,505 | 413,925 | ||||||
Inventory | 36,667 | 35,158 | ||||||
Total current assets | 413,091 | 470,670 | ||||||
Non-current assets: | ||||||||
Income tax recoverable | 682 | 1,602 | ||||||
Deferred tax assets | 454 | 455 | ||||||
Property, plant and equipment | 2,224,106 | 2,303,338 | ||||||
Intangibles | 18,231 | 19,575 | ||||||
Right-of-use assets | 60,496 | 60,032 | ||||||
Investments and other assets | 15,634 | 20,451 | ||||||
Total non-current assets | 2,319,603 | 2,405,453 | ||||||
Total assets | $ | 2,732,694 | $ | 2,876,123 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 261,504 | $ | 392,053 | ||||
Income taxes payable | 1,623 | 2,991 | ||||||
Current portion of lease obligations | 12,859 | 12,698 | ||||||
Current portion of long-term debt | 2,266 | 2,287 | ||||||
Total current liabilities | 278,252 | 410,029 | ||||||
Non-current liabilities: | ||||||||
Share-based compensation | 17,483 | 60,133 | ||||||
Provisions and other | 7,149 | 7,538 | ||||||
Lease obligations | 53,453 | 52,978 | ||||||
Long-term debt | 964,103 | 1,085,970 | ||||||
Deferred tax liabilities | 63,576 | 28,946 | ||||||
Total non-current liabilities | 1,105,764 | 1,235,565 | ||||||
Shareholders’ equity: | ||||||||
Shareholders’ capital | 2,306,545 | 2,299,533 | ||||||
Contributed surplus | 73,688 | 72,555 | ||||||
Deficit | (1,178,543 | ) | (1,301,273 | ) | ||||
Accumulated other comprehensive income | 146,988 | 159,714 | ||||||
Total shareholders’ equity | 1,348,678 | 1,230,529 | ||||||
Total liabilities and shareholders’ equity | $ | 2,732,694 | $ | 2,876,123 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Stated in thousands of Canadian dollars, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 425,622 | $ | 326,016 | $ | 984,229 | $ | 677,355 | ||||||||
Expenses: | ||||||||||||||||
Operating | 260,170 | 240,552 | 600,037 | 499,526 | ||||||||||||
General and administrative | 23,359 | 21,365 | 38,880 | 76,875 | ||||||||||||
Earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization | 142,093 | 64,099 | 345,312 | 100,954 | ||||||||||||
Depreciation and amortization | 74,088 | 69,757 | 145,631 | 138,214 | ||||||||||||
Gain on asset disposals | (3,872 | ) | (10,800 | ) | (13,148 | ) | (13,914 | ) | ||||||||
Foreign exchange | (774 | ) | 536 | (1,257 | ) | 18 | ||||||||||
Finance charges | 21,408 | 21,043 | 44,328 | 41,773 | ||||||||||||
Gain on repurchase of unsecured senior notes | (100 | ) | — | (100 | ) | — | ||||||||||
Loss (gain) on investments and other assets | 5,658 | 4,346 | 9,888 | (1,223 | ) | |||||||||||
Earnings (loss) before income taxes | 45,685 | (20,783 | ) | 159,970 | (63,914 | ) | ||||||||||
Income taxes: | ||||||||||||||||
Current | 1,120 | 635 | 1,961 | 1,605 | ||||||||||||
Deferred | 17,665 | 3,193 | 35,279 | 2,936 | ||||||||||||
18,785 | 3,828 | 37,240 | 4,541 | |||||||||||||
Net earnings (loss) | $ | 26,900 | $ | (24,611 | ) | $ | 122,730 | $ | (68,455 | ) | ||||||
Net earnings (loss) per share: | ||||||||||||||||
Basic | $ | 1.97 | $ | (1.81 | ) | $ | 8.98 | $ | (5.06 | ) | ||||||
Diluted | $ | 1.63 | $ | (1.81 | ) | $ | 7.22 | $ | (5.06 | ) |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net earnings (loss) | $ | 26,900 | $ | (24,611 | ) | $ | 122,730 | $ | (68,455 | ) | ||||||
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency | (31,718 | ) | 44,638 | (35,858 | ) | 27,667 | ||||||||||
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt | 20,459 | (33,831 | ) | 23,132 | (21,063 | ) | ||||||||||
Comprehensive income (loss) | $ | 15,641 | $ | (13,804 | ) | $ | 110,004 | $ | (61,851 | ) |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Stated in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Cash provided by (used in): | ||||||||||||||||
Operations: | ||||||||||||||||
Net earnings (loss) | $ | 26,900 | $ | (24,611 | ) | $ | 122,730 | $ | (68,455 | ) | ||||||
Adjustments for: | ||||||||||||||||
Long-term compensation plans | 1,740 | 3,224 | (2,377 | ) | 34,436 | |||||||||||
Depreciation and amortization | 74,088 | 69,757 | 145,631 | 138,214 | ||||||||||||
Gain on asset disposals | (3,872 | ) | (10,800 | ) | (13,148 | ) | (13,914 | ) | ||||||||
Foreign exchange | (786 | ) | 422 | (1,288 | ) | 151 | ||||||||||
Finance charges | 21,408 | 21,043 | 44,328 | 41,773 | ||||||||||||
Income taxes | 18,785 | 3,828 | 37,240 | 4,541 | ||||||||||||
Other | (220 | ) | 275 | (220 | ) | 275 | ||||||||||
Loss (gain) on investments and other assets | 5,658 | 4,346 | 9,888 | (1,223 | ) | |||||||||||
Gain on repurchase of unsecured senior notes | (100 | ) | — | (100 | ) | — | ||||||||||
Income taxes paid | (2,037 | ) | (2,576 | ) | (2,208 | ) | (2,803 | ) | ||||||||
Income taxes recovered | 3 | — | 3 | — | ||||||||||||
Interest paid | (4,827 | ) | (4,540 | ) | (44,202 | ) | (42,701 | ) | ||||||||
Interest received | 219 | 5 | 335 | 34 | ||||||||||||
Funds provided by operations | 136,959 | 60,373 | 296,612 | 90,328 | ||||||||||||
Changes in non-cash working capital balances | 76,501 | 74,801 | (54,796 | ) | (20,448 | ) | ||||||||||
213,460 | 135,174 | 241,816 | 69,880 | |||||||||||||
Investments: | ||||||||||||||||
Purchase of property, plant and equipment | (44,037 | ) | (39,436 | ) | (94,832 | ) | (75,838 | ) | ||||||||
Purchase of intangibles | (677 | ) | — | (677 | ) | — | ||||||||||
Proceeds on sale of property, plant and equipment | 6,261 | 6,849 | 14,026 | 9,696 | ||||||||||||
Business acquisitions | — | — | (28,000 | ) | — | |||||||||||
Purchase of investments and other assets | (2,016 | ) | (536 | ) | (2,071 | ) | (536 | ) | ||||||||
Changes in non-cash working capital balances | (3,593 | ) | (3,659 | ) | (11,325 | ) | (447 | ) | ||||||||
(44,062 | ) | (36,782 | ) | (122,879 | ) | (67,125 | ) | |||||||||
Financing: | ||||||||||||||||
Issuance of long-term debt | — | 6,405 | 139,049 | 94,529 | ||||||||||||
Repayments of long-term debt | (177,677 | ) | (75,921 | ) | (239,021 | ) | (84,111 | ) | ||||||||
Repurchase of share capital | (7,958 | ) | (5,000 | ) | (12,951 | ) | (5,000 | ) | ||||||||
Issuance of common shares on the exercise of options | — | 4,766 | — | 6,162 | ||||||||||||
Lease payments | (2,042 | ) | (1,842 | ) | (4,003 | ) | (3,409 | ) | ||||||||
(187,677 | ) | (71,592 | ) | (116,926 | ) | 8,171 | ||||||||||
Effect of exchange rate changes on cash | (421 | ) | 739 | (679 | ) | 127 | ||||||||||
Increase (decrease) in cash | (18,700 | ) | 27,539 | 1,332 | 11,053 | |||||||||||
Cash, beginning of period | 41,619 | 24,102 | 21,587 | 40,588 | ||||||||||||
Cash, end of period | $ | 22,919 | $ | 51,641 | $ | 22,919 | $ | 51,641 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(Stated in thousands of Canadian dollars) | Shareholders’ Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total Equity | |||||||||||||||
Balance at January 1, 2023 | $ | 2,299,533 | $ | 72,555 | $ | 159,714 | $ | (1,301,273 | ) | $ | 1,230,529 | |||||||||
Net earnings for the period | — | — | — | 122,730 | 122,730 | |||||||||||||||
Other comprehensive loss for the period | — | — | (12,726 | ) | — | (12,726 | ) | |||||||||||||
Settlement of Executive Performance and Restricted Share Units | 19,206 | — | — | — | 19,206 | |||||||||||||||
Share repurchases | (12,951 | ) | — | — | — | (12,951 | ) | |||||||||||||
Redemption of non-management directors share units | 757 | — | — | — | 757 | |||||||||||||||
Share-based compensation expense | — | 1,133 | — | — | 1,133 | |||||||||||||||
Balance at June 30, 2023 | $ | 2,306,545 | $ | 73,688 | $ | 146,988 | $ | (1,178,543 | ) | $ | 1,348,678 |
(Stated in thousands of Canadian dollars) | Shareholders’ Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total Equity | |||||||||||||||
Balance at January 1, 2022 | $ | 2,281,444 | $ | 76,311 | $ | 134,780 | $ | (1,266,980 | ) | $ | 1,225,555 | |||||||||
Net loss for the period | — | — | — | (68,455 | ) | (68,455 | ) | |||||||||||||
Other comprehensive income for the period | — | — | 6,604 | — | 6,604 | |||||||||||||||
Share options exercised | 8,843 | (2,681 | ) | — | — | 6,162 | ||||||||||||||
Share repurchases | (5,000 | ) | — | — | — | (5,000 | ) | |||||||||||||
Share-based compensation reclassification | 14,083 | (219 | ) | — | — | 13,864 | ||||||||||||||
Share-based compensation expense | — | 646 | — | — | 646 | |||||||||||||||
Balance at June 30, 2022 | $ | 2,299,370 | $ | 74,057 | $ | 141,384 | $ | (1,335,435 | ) | $ | 1,179,376 |
2023 SECOND QUARTER RESULTS 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, July 27, 2023.
To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions.
https://register.vevent.com/register/BIf5c55d0560124b6695127e367e6c4f90
The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision’s website for 12 months.
https://edge.media-server.com/mmc/p/gpgem9pa
About Precision
Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.
Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS.”
For further information, please contact:
Lavonne Zdunich, CPA, CA
Director, Investor Relations
403.716.4500
800, 525 - 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com