Precision Drilling Corporation Announces Four Kuwait Contract Awards

Rhea-AI Summary

Precision Drilling Corporation (PDS) announced the award of four five-year contracts in Kuwait, increasing its active rig count in the region to five by mid-2023. Additionally, it secured a five-year contract extension for its third drilling rig in Saudi Arabia, bringing the total to eight rigs under long-term contracts in the Middle East, amounting to approximately US$600 million in backlog revenue. These contracts are expected to enhance operational leverage and provide steady cash flow, aligning with Precision's strategic priorities.

Positive

• Awarded four five-year contracts in Kuwait, increasing active rig count to five.
• Secured a five-year contract extension for a rig in Saudi Arabia.
• Eight rigs under long-term contracts in the Middle East valued at approximately US$600 million.

Negative

• None.

This news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For important information with respect to such forward-looking information and statements and the further assumptions and risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release.

CALGARY, Alberta, Oct. 19, 2022 (GLOBE NEWSWIRE) -- Precision Drilling Corporation (“Precision” or the “Company”) (TSX:PD; NYSE:PDS) is pleased to announce that it was recently awarded four contracts in Kuwait, each with a five year term and an optional one year renewal. The contract awards are for our AC Super Triple 3000 HP rigs and increase our active rig count in Kuwait from three rigs to five rigs by the middle of 2023.

In addition, we recently signed our third drilling rig in the Kingdom of Saudi Arabia to a five year contract extension, following two earlier five year contract signings in the second quarter of this year. With the three contract extensions in Saudi Arabia and the Kuwait contract awards, Precision will have eight rigs under long-term contracts in the Middle East stretching into 2028 and representing approximately US$600 million (approximately C$820 million) in backlog revenue.

“Precision’s success in earning these contract awards is a result of our team’s dedication and commitment to our High Performance, High Value strategy and the outstanding service we have delivered to customers in the Middle East region. Furthermore, the recent contract awards allow us to leverage our scale in the region and generate steady, reliable cash flow, creating value for our shareholders and fulfilling one of Precision’s 2022 strategic priorities to maximize our operational leverage. I would like to congratulate our team for securing these contracts and look forward to continuing the excellent service our customers can expect from Precision,” commented Kevin Neveu, Precision’s President and CEO.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this report, 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 2022; and
• anticipated activity levels, demand for our drilling rigs and cash flow.

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:

• the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets;
• the success of our response to the COVID-19 global pandemic;
• the status of current negotiations with our customers and vendors;
• customer focus on safety performance;
• existing term contracts are neither renewed nor terminated prematurely; and
• our ability to deliver rigs to customers on a timely basis; 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 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;
• changes in drilling and well servicing technology which could reduce demand for certain rigs or put us at a competitive disadvantage;
• shortages, delays and interruptions in the delivery of equipment supplies and other key inputs;
• the effects of seasonal and weather conditions on operations and facilities;
• the availability of qualified personnel and management;
• a decline in our safety performance which could result in lower demand for our services;
• 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 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, 2021, 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 news 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.

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 - 8^th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com

FAQ

What recent contracts did Precision Drilling Corporation (PDS) secure?

Precision Drilling Corporation secured four five-year contracts in Kuwait and a five-year contract extension in Saudi Arabia.

How will the new contracts impact Precision's operations in Kuwait?

The new contracts will increase Precision's active rig count in Kuwait from three to five by mid-2023.

What is the total value of the contracts awarded to Precision Drilling in the Middle East?

The contracts represent approximately US$600 million in backlog revenue for Precision Drilling.

When are the new contracts and extensions effective for Precision Drilling?

The new contracts in Kuwait are expected to increase rig count by mid-2023, while the Saudi Arabia contract extensions are already in place.