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 Adjusted EBITDA (earnings before income taxes, loss (gain) on
repurchase of unsecured senior notes, loss (gain) on investments
and other assets, finance charges, foreign exchange, gain on asset
disposals and depreciation and amortization), Covenant EBITDA,
Operating Earnings (Loss), Funds Provided by (Used in) Operations
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 “Non-GAAP Measures” later in this news release.
Precision Drilling announces 2021 fourth quarter
and year-end financial results:
- Adjusted EBITDA
(See “NON-GAAP MEASURES”) of $64 million. Excluding the impact of
share-based compensation charges our Adjusted EBITDA was $70
million.
- Revenue of $295
million was an increase of 46% compared with the fourth quarter of
2020.
- Net loss of $27
million or $2.05 per share compared with a net loss of $38 million
or $2.74 per share in the fourth quarter of 2020.
- Generated cash and
funds provided by operations (see “NON-GAAP MEASURES”) of $60
million and $63 million, respectively.
- Fourth quarter
ending cash balance of $41 million and more than $530 million of
available liquidity.
- Fourth quarter debt
reduction of $55 million, resulting in $115 million of total debt
reduction for the year, exceeding the midpoint of our 2021 debt
reduction target of $100 million to $125 million.
- Fourth quarter
capital expenditures were $28 million.
- Achieved our 2021
strategic priorities focused on Alpha™ revenue and market
share growth, free cash flow generation and debt reduction, and
leading ESG (environmental, social and governance)
performance.
Precision’s President and CEO Kevin Neveu
stated:
“Precision’s strong fourth quarter operating
performance and sequentially improved financial results demonstrate
the exceptional financial operating leverage we expect to deliver
as the industry continues to recover. The strategic priorities we
executed upon in 2020 and 2021 to optimize our costs, improve and
de-risk our capital structure, and position Alpha™ digital
technologies and EverGreen™ environmental solutions for our
competitive advantage, ideally position the company for the robust
industry outlook we see today. I would like to extend my gratitude
to the highly skilled rig crews of Precision, who have managed the
health and safety challenges on our rigs through the pandemic while
ensuring our new technologies deliver the value our customers
expect, and to our administrative and support teams, who have
developed and maintained a lean and highly efficient back office to
support Precision’s field operations and our customers.”
“In the U.S., we have 52 rigs active today, a
58% increase from this time last year and up 18% from the end of
the third quarter. Customer inquiries and bid activity point to
increasing activity in both the U.S. and Canada, reflecting higher
commodity prices. In Canada, we have 66 rigs active today and
expect demand to remain at high levels through the first part of
March and are already observing better than expected bookings
through spring break-up and into the second half of the year.
Leading edge day rates and margins have stepped upwards as the
supply of super spec rigs across North America is materially
tightening and reactivation investments require improved economics
for industry activity to grow. Internationally, we have 6 rigs
active and are participating in several rig tenders which we expect
will result in awards later this year.”
“Demand for our Alpha™ suite of digital
technologies continues to gain the attention of our customers, and
the fourth quarter represented Precision’s strongest utilization
and revenue quarter since we commercialized the offering in late
2019. We ended the year with 47 Super Triple rigs equipped with
Alpha™ and increased paid AlphaApps™ days by 50% from the
third quarter. Today, we have 49 Super Triple rigs equipped with
Alpha™ and expect to end the year with approximately 70
Alpha™ enabled rigs in our fleet, demonstrating our ability to
rapidly scale the offering in just three years since
commercialization.”
“Precision’s Completion and Production Services
business had its best performance in nearly five years, generating
$24 million of Adjusted EBITDA in 2021. Demand was supported by
higher commodity prices, the Government of Canada’s $1.7 billion
well abandonment program and our customers’ desire to secure work
from high-quality and reliable service providers. Today, Precision
Well Servicing is operating approximately 50 rigs and we expect
activity to track higher year-over-year for most of 2022.”
“Our 2022 strategic priorities, outlined later
in this release, reinforce our commitment to growing our technology
and ESG leadership positions, fortifying the balance sheet and
improving returns to shareholders. Under our recently announced
capital allocation framework, we expect to surpass $1 billion of
debt reduction, achieve leverage levels below 1.5 times and
increase allocations directly to shareholders by the end of 2025.
Since 2018, we have reduced debt by $665 million and allocated $42
million to share repurchases. We believe the operating leverage
associated with Precision’s business will deliver cash flows
capable of supporting higher activity and success achieving our
capital allocation targets, ultimately driving sustained
shareholder value,” concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING
INFORMATION
Financial Highlights
|
For the three months ended December 31, |
|
|
For the year ended December 31, |
|
(Stated
in thousands of Canadian dollars, except per share amounts) |
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue |
|
295,202 |
|
|
|
201,688 |
|
|
|
46.4 |
|
|
|
986,847 |
|
|
|
935,753 |
|
|
|
5.5 |
|
Adjusted EBITDA(1) |
|
63,881 |
|
|
|
55,263 |
|
|
|
15.6 |
|
|
|
192,772 |
|
|
|
263,403 |
|
|
|
(26.8 |
) |
Operating loss(1) |
|
(5,005 |
) |
|
|
(17,613 |
) |
|
|
(71.6 |
) |
|
|
(81,038 |
) |
|
|
(40,988 |
) |
|
|
97.7 |
|
Net loss |
|
(27,336 |
) |
|
|
(37,518 |
) |
|
|
(27.1 |
) |
|
|
(177,386 |
) |
|
|
(120,138 |
) |
|
|
47.7 |
|
Cash provided by
operations |
|
59,713 |
|
|
|
4,737 |
|
|
|
1,160.6 |
|
|
|
139,225 |
|
|
|
226,118 |
|
|
|
(38.4 |
) |
Funds provided by
operations(1) |
|
62,681 |
|
|
|
35,282 |
|
|
|
77.7 |
|
|
|
152,243 |
|
|
|
170,727 |
|
|
|
(10.8 |
) |
Capital spending: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expansion and upgrade |
|
3,125 |
|
|
|
13,094 |
|
|
|
(76.1 |
) |
|
|
19,006 |
|
|
|
26,858 |
|
|
|
(29.2 |
) |
Maintenance and infrastructure |
|
24,625 |
|
|
|
9,818 |
|
|
|
150.8 |
|
|
|
56,935 |
|
|
|
34,677 |
|
|
|
64.2 |
|
Intangibles |
|
- |
|
|
|
- |
|
|
n.m. |
|
|
|
- |
|
|
|
57 |
|
|
|
(100.0 |
) |
Proceeds on sale |
|
(2,696 |
) |
|
|
(4,678 |
) |
|
|
(42.4 |
) |
|
|
(13,086 |
) |
|
|
(21,094 |
) |
|
|
(38.0 |
) |
Net capital spending |
|
25,054 |
|
|
|
18,234 |
|
|
|
37.4 |
|
|
|
62,855 |
|
|
|
40,498 |
|
|
|
55.2 |
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
(2.05 |
) |
|
|
(2.74 |
) |
|
|
(25.0 |
) |
|
|
(13.32 |
) |
|
|
(8.76 |
) |
|
|
52.1 |
|
Diluted |
|
(2.05 |
) |
|
|
(2.74 |
) |
|
|
(25.0 |
) |
|
|
(13.32 |
) |
|
|
(8.76 |
) |
|
|
52.1 |
|
(1) See “NON-GAAP
MEASURES.”n.m. Not meaningful.
Operating Highlights
|
For the three months ended December 31, |
|
|
For the year ended December 31, |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
Contract drilling rig fleet |
|
227 |
|
|
|
227 |
|
|
|
- |
|
|
|
227 |
|
|
|
227 |
|
|
|
- |
|
Drilling rig utilization
days: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
4,179 |
|
|
|
2,396 |
|
|
|
74.4 |
|
|
|
14,494 |
|
|
|
12,080 |
|
|
|
20.0 |
|
Canada |
|
4,819 |
|
|
|
2,578 |
|
|
|
86.9 |
|
|
|
15,782 |
|
|
|
10,794 |
|
|
|
46.2 |
|
International |
|
552 |
|
|
|
552 |
|
|
|
- |
|
|
|
2,190 |
|
|
|
2,526 |
|
|
|
(13.3 |
) |
Revenue per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.(1) (US$) |
|
21,976 |
|
|
|
25,577 |
|
|
|
(14.1 |
) |
|
|
21,213 |
|
|
|
26,184 |
|
|
|
(19.0 |
) |
Canada (Cdn$) |
|
22,948 |
|
|
|
21,670 |
|
|
|
5.9 |
|
|
|
21,105 |
|
|
|
21,611 |
|
|
|
(2.3 |
) |
International (US$) |
|
52,069 |
|
|
|
55,453 |
|
|
|
(6.1 |
) |
|
|
52,837 |
|
|
|
54,811 |
|
|
|
(3.6 |
) |
Operating cost per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. (US$) |
|
16,056 |
|
|
|
14,419 |
|
|
|
11.4 |
|
|
|
15,048 |
|
|
|
14,666 |
|
|
|
2.6 |
|
Canada (Cdn$) |
|
14,935 |
|
|
|
12,291 |
|
|
|
21.5 |
|
|
|
13,734 |
|
|
|
13,546 |
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service rig fleet |
|
123 |
|
|
|
123 |
|
|
|
- |
|
|
|
123 |
|
|
|
123 |
|
|
|
- |
|
Service
rig operating hours |
|
33,063 |
|
|
|
27,286 |
|
|
|
21.2 |
|
|
|
126,840 |
|
|
|
81,952 |
|
|
|
54.8 |
|
(1) Includes revenue from
idle but contracted rig days.
Financial Position
(Stated in thousands of Canadian dollars, except ratios) |
December 31, 2021 |
|
|
December 31, 2020 |
|
Working capital(1) |
|
81,637 |
|
|
|
175,423 |
|
Cash |
|
40,588 |
|
|
|
108,772 |
|
Long-term debt |
|
1,106,794 |
|
|
|
1,236,210 |
|
Total long-term financial
liabilities |
|
1,185,858 |
|
|
|
1,304,162 |
|
Total assets |
|
2,661,752 |
|
|
|
2,898,878 |
|
Long-term debt to long-term debt plus equity ratio |
|
0.47 |
|
|
|
0.47 |
|
(1) See “NON-GAAP
MEASURES.”
Summary for the three months ended December 31,
2021:
- Revenue for the
fourth quarter was $295 million, 46% higher than in 2020 and was
the result of increased drilling and service rig activity,
partially offset by lower average revenue rates in the U.S. and
internationally. Drilling rig utilization days increased by 74% in
the U.S. and 87% in Canada and well service activity increased 21%
as compared with the fourth quarter of 2020.
- Adjusted EBITDA
(see “NON-GAAP MEASURES”) for the quarter was $64 million, $9
million higher than 2020. Our higher Adjusted EBITDA in the current
quarter was mainly due to higher drilling and service activity,
lower share-based compensation charges, partially offset by lower
Canada Emergency Wage Subsidy (“CEWS”) program assistance, U.S.
wage increases and labour settlement, and the impact of a $3
million inventory write-down. Our Adjusted EBITDA as a percentage
of revenue was 22% this quarter, compared with 27% in the
comparative quarter.
- General and
administrative expenses this quarter were $19 million, $2 million
lower than in 2020 due to lower share-based compensation charges,
partially offset by lower CEWS program assistance.
- Net finance charges
for the quarter were $21 million, $4 million lower than in 2020,
and was primarily due to reduced interest expense from lower debt
levels and average cost of borrowings.
- In the U.S.,
revenue per utilization day in the fourth quarter of 2021 decreased
to US$21,976 compared with US$25,577 in 2020. The decrease was
primarily the result of lower revenue from idle but contracted rigs
and lower fleet average day rates. During the fourth quarter of
2021, we recognized revenue from idle but contracted rigs and
turnkey projects of nil and US$6 million, respectively, as compared
with US$7 million and US$5 million in 2020. Excluding the impact of
idle but contracted rig revenue, our fourth quarter 2021 average
revenue per utilization day decreased 3% compared with 2020. On a
sequential basis, revenue per utilization day, excluding revenue
from turnkey drilling and idle but contracted rigs, increased by
US$233.
- In the U.S., our
fourth quarter operating costs on a per day basis increased to
US$16,056, compared with US$14,419 in 2020 due to higher rig
operating expenses, partially offset by the impact of fixed costs
being spread over higher activity and lower turnkey costs. During
the fourth quarter of 2021 we incurred a non-recurring wage dispute
settlement charge of US$1.5 million that increased daily operating
costs by US$378 per day. Additionally, in December of 2021, we
implemented field wage increases and after quarter end, adjusted
day rates for these increases. The higher wages increased our daily
operating costs by US$242 per day and negatively impacted field
margins for the quarter by the same amount. In the prior year
quarter, we recognized US$3 million of certain operating cost
recoveries, further reducing our comparative daily operating costs
by approximately US$1,300 per day. Sequentially, excluding the
impact of turnkey activity, our operating costs per day decreased
by US$177.
- In Canada, average
revenue per utilization day for contract drilling rigs for the
quarter was $22,948 compared with $21,670 in 2020. The higher
average revenue per utilization day in 2021 was primarily due to
higher average day rates. Average operating costs per utilization
day in Canada for the quarter increased to $14,935 compared with
$12,291 in 2020. The increase was mainly due to industry-wide wage
increases and lower CEWS program assistance, partially offset by
fixed costs being spread over higher activity. Sequentially, our
2021 fourth quarter daily operating margin (revenue less operating
costs) increased by $2,701 per day compared with the third
quarter.
- During the quarter,
we recognized CEWS program assistance of $0.3 million as compared
with $10 million in 2020. CEWS program assistance was presented as
offsets to operating and general and administrative costs of $0.2
million and $0.1 million, respectively, as compared with $8 million
and $2 million in 2020.
- We realized fourth
quarter revenue from international contract drilling of US$29
million in 2021, as compared with US$31 million in 2020. The lower
revenue in 2021 was primarily due to lower day rates. The average
revenue per utilization day for the quarter was US$52,069, 6% lower
than in the fourth quarter of 2020.
- Cash and funds
provided by operations (see “NON-GAAP MEASURES”) in the fourth
quarter of 2021 were $60 million and $63 million, respectively,
compared with $5 million and $35 million in 2020.
- Capital
expenditures were $28 million as compared with $23 million in 2020.
Capital spending included $3 million for expansion and upgrade
capital and $25 million for the maintenance of existing assets,
infrastructure spending and intangibles.
- During the fourth
quarter of 2021, we reduced long-term debt by $55 million.
Summary for the twelve months ended December 31,
2021:
- Revenue for the
year ended December 31, 2021 was $987 million, an increase of 5%
from the prior year.
- Adjusted EBITDA
(see “NON-GAAP MEASURES”) for the period was $193 million, $71
million lower than 2020. Our Adjusted EBITDA was negatively
impacted by lower idle but contracted rig revenue, higher
share-based compensation charges, lower average day rates and the
impact of a $3 million inventory write-down, partially offset by
improved North American activity.
- General and
administrative costs were $96 million, an increase of $25 million
from 2020. The increase was primarily the result of higher
share-based compensation charges and lower CEWS program assistance,
partially offset by lower salary and wage expenses as a result of
our restructuring in 2020.
- Net finance charges
were $91 million, a decrease of $16 million from 2020 primarily due
to reduced interest expense from lower debt levels and average cost
of borrowings, partially offset by higher amortized debt issue
costs.
- Cash provided by
operations was $139 million in 2021 as compared with $226 million
in 2020. Funds provided by operations (see “NON-GAAP MEASURES”) in
2021 were $152 million, a decrease of $18 million from the prior
year comparative period of $171 million.
- Capital
expenditures were $76 million in 2021, an increase of $14 million
for the same period in 2020. Capital spending in 2021 included $19
million for expansion and upgrade capital and $57 million for the
maintenance of existing assets, infrastructure spending and
intangibles.
- For the year ended
December 31, 2021, we reduced long-term debt by $115 million and
repurchased and cancelled 155,168 common shares for $4 million
pursuant to our Normal Course Issuer Bid.
STRATEGY
Precision’s strategic priorities for 2021 were
as follows:
- Grow
revenue and market share through our digital leadership
position – Precision exited the year with 47 AC Super
Triple Alpha™ rigs equipped with our
AlphaAutomation™ platform and 16 commercialized AlphaApps™.
Our fourth quarter paid AlphaApps™ days increased 50% compared
with the third quarter of 2021, with the increase largely driven by
operational performance, additional revenue generating days and
further uptake of customers fully utilizing our suite of
Alpha™ digital technologies. During the quarter, Precision
added four new AlphaAutomation™ customers and
quarter-over-quarter paid AlphaAutomation™ days and
AlphaApps™ days increased by 6% and 50%, respectively, while
AlphaAnalytics™ days decreased by 18%.
- Demonstrate
operational leverage to generate free cash flow and reduce
debt – In the fourth quarter of 2021, Precision generated
$60 million of cash provided by operations and $3 million of cash
proceeds from the divestiture of non-core assets. During the year,
we reduced debt levels by $115 million, exceeding the midpoint of
our 2021 debt reduction target of $100 million to $125 million.
Precision ended the year with a cash balance of $41 million, US$118
million drawn on our US$500 million Senior Credit Facility and over
$530 million of available liquidity.
- Deliver
leading ESG (environmental, social and governance) performance to
strengthen customer and stakeholder positioning – During
the year, we introduced our EverGreen™ suite of environmental
solutions focused on emissions reduction products and services to
complement our Super Series drilling rigs and our
Alpha™ digital technologies. We successfully deployed our
EverGreen™ Battery Energy Storage System, a natural gas and
low emission power generating system used to reduce Greenhouse Gas
(GHG) emissions and fuel costs, helping our
customers achieve their GHG emission-reduction targets and
improving their well construction economics. We continue to see
strong customer appetite in both Canada and the U.S. for our
Battery Energy Storage System and expect deployments of three
systems in the first quarter of 2022 with several additional
pending commitments by mid-year. In the fourth quarter, we deployed
our Power & Emissions Monitoring System, a real-time combustion
fuel monitoring packages, using AlphaAnalytics™ to establish a
real-time well site GHG footprint and gain insight into the
correlation between power demand, fuel consumption and resulting
GHG emissions throughout the well construction process. Capturing
and analyzing a pool of data across different rigs, well profiles,
engine types and geographic areas, will meaningfully improve our
understanding of the variability of land drilling GHG emissions and
help operate power generating equipment with optimal fuel
consumption and carbon footprint efficiency.
Precision’s strategic priorities for 2022 are
focused on furthering our digital and ESG initiatives, maximizing
our operating leverage and utilizing cash flow to strengthen our
balance sheet and competitive position. Precision’s strategic
priorities for 2022 are as follows:
- Grow
revenue through scaling Alpha™ digital
technologies and EverGreen™ environmental
solutions across Precision’s Super Series
rig fleet and further competitive differentiation through
ESG initiatives.
- Grow free
cash flow by maximizing operating leverage as demand for
our High Performance, High Value
services continues to rebound.
- Utilize
free cash flow to continue strengthening our balance sheet while
investing in our people, equipment and returning capital to
shareholders.
OUTLOOK
The return of global energy demand and the need
for global upstream oil and natural gas investment has resulted in
sustained periods of strong commodity prices, providing a promising
backdrop for the oilfield services industry. At current commodity
prices, we anticipate higher demand for our services and improved
fleet utilization as customers look to maintain and replenish
production levels as drilled but uncompleted well inventories have
been depleted and offset the impact of a multi-year period of
upstream underinvestment.
Interest in our EverGreen™ environmental
solutions continues to gain momentum as customers seek meaningful
solutions to achieve their emission reduction targets and improve
their well economics. We expect our growing suite of
Alpha™ digital technologies paired with our
EverGreen™ environmental solutions to be key competitive
differentiators as our predictable and repeatable drilling results
deliver exceptional value to our customers by reducing risks, time,
well construction costs, and carbon footprint.
The Government of Canada’s $1.7 billion well
site abandonment and rehabilitation program has supplemented
industry activity levels and provided thousands of jobs throughout
Western Canada. The program runs through to the end of 2022 with
government funds provided in stages. Our well servicing business
continues to capture opportunities because of our scale,
operational performance, and strong safety record. During the
fourth quarter of 2021, our abandonment activity remained strong,
and we expect this momentum to continue through to the end of the
program in 2022.
During 2020, the Government of Canada introduced
the CEWS program to subsidize a portion of employee wages for
Canadian employers whose businesses have been adversely affected by
COVID-19. The CEWS program ended in the fourth quarter of 2021. For
the three months ended December 31, 2021, we recognized $0.3
million (2020 – $10 million) in CEWS program assistance, which was
presented as offsets to operating and general and administrative
expenses of $0.2 million (2020 - $8 million) and $0.1 million (2020
- $2 million), respectively.
Commodity Prices
During the fourth quarter of 2021, average West
Texas Intermediate and Western Canadian Select oil prices were
higher by 81% and 89%, respectively, from the comparative quarter.
While average Henry Hub and AECO natural gas prices improved by 75%
and 78%, respectively from 2020.
|
|
For the three months endedDecember 31, |
|
|
For the year endedDecember 31, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
2020 |
|
Average oil and natural gas prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Texas Intermediate (per barrel) (US$) |
|
|
77.10 |
|
|
|
42.63 |
|
|
67.91 |
|
|
39.40 |
|
Western Canadian Select (per barrel) (US$) |
|
|
62.45 |
|
|
|
33.06 |
|
|
54.84 |
|
|
26.56 |
|
Natural
gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Hub (per MMBtu) (US$) |
|
|
4.84 |
|
|
|
2.76 |
|
|
3.72 |
|
|
2.13 |
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AECO (per MMBtu) (CDN$) |
|
|
4.73 |
|
|
|
2.66 |
|
|
3.64 |
|
|
2.24 |
|
Contracts
The following chart outlines the average number
of drilling rigs under contract by quarter as of February 9, 2022.
For those quarters ending after December 31, 2021, this chart
represents the minimum number of long-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 contracts.
|
|
Average for the quarter ended 2021 |
|
|
Average for the quarter ended 2022 |
|
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
Average rigs under term contract as of February 9, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
21 |
|
|
|
24 |
|
|
|
22 |
|
|
|
24 |
|
|
|
27 |
|
|
|
24 |
|
|
|
17 |
|
|
|
13 |
|
Canada |
|
|
6 |
|
|
|
6 |
|
|
|
7 |
|
|
|
7 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
International |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
Total |
|
|
33 |
|
|
|
36 |
|
|
|
35 |
|
|
|
37 |
|
|
|
39 |
|
|
|
34 |
|
|
|
27 |
|
|
|
23 |
|
The following chart outlines the average number
of drilling rigs that we had under contract for 2021 and the
average number of rigs we have under contract as of February 9,
2022.
|
|
Average for the year ended |
|
|
|
|
|
2021 |
|
|
2022 |
|
|
|
Average rigs under term contract as of February 9, 2022: |
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
23 |
|
|
|
20 |
|
|
|
Canada |
|
|
7 |
|
|
|
6 |
|
|
|
International |
|
|
6 |
|
|
|
5 |
|
|
|
Total |
|
|
36 |
|
|
|
31 |
|
|
|
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.
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 2020 |
|
Average for the quarter ended 2021 |
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
Average Precision active rig count: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
55 |
|
|
|
30 |
|
|
|
21 |
|
|
|
26 |
|
|
|
33 |
|
|
|
39 |
|
|
|
41 |
|
|
|
45 |
|
Canada |
|
63 |
|
|
|
9 |
|
|
|
18 |
|
|
|
28 |
|
|
|
42 |
|
|
|
27 |
|
|
|
51 |
|
|
|
52 |
|
International |
|
8 |
|
|
|
8 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
Total |
|
126 |
|
|
|
47 |
|
|
|
45 |
|
|
|
60 |
|
|
|
81 |
|
|
|
72 |
|
|
|
98 |
|
|
|
103 |
|
According to industry sources, as of February 9,
2022, the U.S. active land drilling rig count has increased 59%
from the same point last year while the Canadian active land
drilling rig count increased by 27%. To date in 2022, approximately
81% of the U.S. industry’s active rigs and 62% of the Canadian
industry’s active rigs were drilling for oil targets, compared with
76% for the U.S. and 54% for Canada at the same time last year.
Capital Spending and Free Cash Flow
Allocation
Capital spending in 2022 is expected to be $98
million and includes $56 million for sustaining, infrastructure,
and intangibles and $42 million for expansion and upgrades. We
expect that the $98 million will be split $91 million in the
Contract Drilling Services segment, $6 million in the Completion
and Production Services segment and $1 million to the Corporate
segment. At December 31, 2021, Precision had capital commitments of
$137 million with payments expected through 2024.
Our debt reduction plans will continue with the
goal of repaying over $400 million in debt over the next four years
and reaching a sustained Net Debt to Adjusted EBITDA ratio of below
1.5 times. At the end of 2025, we expect to have reduced debt by
well over $1 billion since 2018. In addition to debt reduction
targets through 2025, we plan to allocate 10% to 20% of free cash
flow before debt principal repayments toward the return of capital
to shareholders.
SEGMENTED FINANCIAL RESULTS
Precision’s operations are reported in two
segments: Contract Drilling Services, which includes our drilling
rig, directional drilling (divested in the third quarter of 2021),
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 December 31, |
|
|
For the year ended December 31, |
|
(Stated
in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
264,911 |
|
|
|
179,142 |
|
|
|
47.9 |
|
|
|
877,943 |
|
|
|
861,202 |
|
|
|
1.9 |
|
Completion and Production Services |
|
32,134 |
|
|
|
23,620 |
|
|
|
36.0 |
|
|
|
113,488 |
|
|
|
77,251 |
|
|
|
46.9 |
|
Inter-segment eliminations |
|
(1,843 |
) |
|
|
(1,074 |
) |
|
|
71.6 |
|
|
|
(4,584 |
) |
|
|
(2,700 |
) |
|
|
69.8 |
|
|
|
295,202 |
|
|
|
201,688 |
|
|
|
46.4 |
|
|
|
986,847 |
|
|
|
935,753 |
|
|
|
5.5 |
|
Adjusted EBITDA:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
68,414 |
|
|
|
63,485 |
|
|
|
7.8 |
|
|
|
231,532 |
|
|
|
300,425 |
|
|
|
(22.9 |
) |
Completion and Production Services |
|
6,274 |
|
|
|
5,297 |
|
|
|
18.4 |
|
|
|
23,807 |
|
|
|
11,257 |
|
|
|
111.5 |
|
Corporate and Other |
|
(10,807 |
) |
|
|
(13,519 |
) |
|
|
(20.1 |
) |
|
|
(62,567 |
) |
|
|
(48,279 |
) |
|
|
29.6 |
|
|
|
63,881 |
|
|
|
55,263 |
|
|
|
15.6 |
|
|
|
192,772 |
|
|
|
263,403 |
|
|
|
(26.8 |
) |
(1) See “NON-GAAP MEASURES.”
SEGMENT REVIEW OF CONTRACT DRILLING
SERVICES
|
For the three months ended December 31, |
|
|
For the year ended December 31, |
|
(Stated
in thousands of Canadian dollars, except where noted) |
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue |
|
264,911 |
|
|
|
179,142 |
|
|
|
47.9 |
|
|
|
877,943 |
|
|
|
861,202 |
|
|
|
1.9 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
189,291 |
|
|
|
109,220 |
|
|
|
73.3 |
|
|
|
618,327 |
|
|
|
526,716 |
|
|
|
17.4 |
|
General and administrative |
|
7,206 |
|
|
|
6,437 |
|
|
|
11.9 |
|
|
|
28,084 |
|
|
|
26,441 |
|
|
|
6.2 |
|
Restructuring |
|
- |
|
|
|
- |
|
|
n.m. |
|
|
|
- |
|
|
|
7,620 |
|
|
|
(100.0 |
) |
Adjusted EBITDA(1) |
|
68,414 |
|
|
|
63,485 |
|
|
|
7.8 |
|
|
|
231,532 |
|
|
|
300,425 |
|
|
|
(22.9 |
) |
Depreciation |
|
64,988 |
|
|
|
67,928 |
|
|
|
(4.3 |
) |
|
|
256,072 |
|
|
|
288,389 |
|
|
|
(11.2 |
) |
Gain on asset disposals |
|
(2,318 |
) |
|
|
(1,554 |
) |
|
|
49.2 |
|
|
|
(7,673 |
) |
|
|
(10,171 |
) |
|
|
(24.6 |
) |
Operating earnings (loss)(1) |
|
5,744 |
|
|
|
(2,889 |
) |
|
|
(298.8 |
) |
|
|
(16,867 |
) |
|
|
22,207 |
|
|
|
(176.0 |
) |
Operating earnings (loss)(1) as a percentage of revenue |
|
2.2 |
% |
|
|
(1.6 |
)% |
|
|
|
|
|
|
(1.9 |
)% |
|
|
2.6 |
% |
|
|
|
|
(1) See “NON-GAAP
MEASURES.”n.m. Not meaningful.
United
States onshore drilling statistics:(1) |
2021 |
|
|
2020 |
|
|
Precision |
|
|
Industry(2) |
|
|
Precision |
|
|
Industry(2) |
|
Average number of active land rigs for quarters ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
33 |
|
|
|
378 |
|
|
|
55 |
|
|
|
764 |
|
June 30 |
|
39 |
|
|
|
437 |
|
|
|
30 |
|
|
|
378 |
|
September 30 |
|
41 |
|
|
|
485 |
|
|
|
21 |
|
|
|
241 |
|
December 31 |
|
45 |
|
|
|
545 |
|
|
|
26 |
|
|
|
297 |
|
Year to date average |
|
40 |
|
|
|
461 |
|
|
|
33 |
|
|
|
420 |
|
(1) United States lower
48 operations only.(2) Baker Hughes rig
counts.
Canadian onshore drilling statistics:(1) |
2021 |
|
|
2020 |
|
|
Precision |
|
|
Industry(2) |
|
|
Precision |
|
|
Industry(2) |
|
Average number of active land rigs for quarters ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
42 |
|
|
|
145 |
|
|
|
63 |
|
|
|
196 |
|
June 30 |
|
27 |
|
|
|
72 |
|
|
|
9 |
|
|
|
25 |
|
September 30 |
|
51 |
|
|
|
151 |
|
|
|
18 |
|
|
|
47 |
|
December 31 |
|
52 |
|
|
|
160 |
|
|
|
28 |
|
|
|
88 |
|
Year to date average |
|
43 |
|
|
|
132 |
|
|
|
29 |
|
|
|
89 |
|
(1) Canadian operations
only.(2) Baker Hughes rig counts.
Revenue from Contract Drilling Services was $265
million this quarter, 48% higher than 2020, while Adjusted EBITDA
(see “NON-GAAP MEASURES”) increased by 8% to $68 million. The
increase in revenue and Adjusted EBITDA was primarily due to higher
activity, partially offset by lower U.S. and international drilling
day rates. Additionally, our Adjusted EBITDA for the quarter was
negatively impacted by a $3 million write-down of obsolete
inventory in our Canadian and international drilling divisions.
Drilling rig utilization days (drilling days
plus move days) in the U.S. were 4,179, 74% higher than 2020.
Drilling rig utilization days in Canada were 4,819 during the
fourth quarter of 2021, 87% higher than 2020. The increase in
utilization days in both the U.S. and Canada was consistent with
higher industry activity. Drilling rig utilization days in our
international business were 552, consistent with 2020.
Revenue per utilization day in the U.S. in the
fourth quarter of 2021 decreased 14% from the comparable quarter.
The decrease was primarily the result of lower revenue from idle
but contracted rigs and lower fleet average day rates. During the
fourth quarter of 2021, we recognized revenue from idle but
contracted rigs and turnkey projects of nil and US$6 million,
respectively, as compared with US$7 million and US$5 million in
2020. Excluding the impact of idle but contracted rig revenue, our
fourth quarter 2021 average revenue per utilization day decreased
3% compared with 2020. Compared with the same quarter in 2020,
drilling rig revenue per utilization day in Canada increased 6% due
to higher average day rates. Our international average revenue per
utilization day for the quarter was 6% lower than the fourth
quarter of 2020, primarily due to the expiration of a drilling
contract.
In the U.S., 51% of utilization days were
generated from rigs under term contract as compared with 62% in the
fourth quarter of 2020. In Canada, 13% of our utilization days in
the quarter were generated from rigs under term contract, compared
with 11% in 2020.
In the U.S., operating costs for the quarter on
a per day basis were higher than the prior year period primarily
due to higher rig operating expenses, partially offset by the
impact of fixed costs being spread over higher activity and lower
turnkey costs. During the fourth quarter of 2021 we incurred a
non-recurring wage dispute settlement charge of US$1.5 million that
increased daily operating costs by US$378 per day. Additionally, in
December of 2021, we implemented field wage increases and after
quarter end, adjusted day rates for these increases. The higher
wages increased our daily operating costs by US$242 per day and
negatively impacted field margins for the quarter by the same
amount. In the prior year quarter, we recognized US$3 million of
certain operating cost recoveries, further reducing our comparative
daily operating costs by approximately US$1,300 per day. On a per
utilization day basis, operating costs in Canada were higher than
the 2020 quarter, mainly due to industry-wide wage increases and
lower CEWS program assistance, partially offset by fixed costs
being spread over higher activity. During the quarter, we did not
recognize any CEWS program assistance as compared with $6 million
in 2020.
Depreciation expense in the quarter was 4% lower
than in 2020 primarily because of a lower capital asset base as
assets become fully depreciated, decommissioned or disposed.
In the fourth quarter of 2021, we sold used
assets recognizing a gain on disposal of $2 million, consistent
with 2020.
SEGMENT REVIEW OF COMPLETION AND
PRODUCTION SERVICES
|
For the three months ended December 31, |
|
|
For the year ended December 31, |
|
(Stated
in thousands of Canadian dollars, except where noted) |
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
|
% Change |
|
Revenue |
|
32,134 |
|
|
|
23,620 |
|
|
|
36.0 |
|
|
|
113,488 |
|
|
|
77,251 |
|
|
|
46.9 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
24,698 |
|
|
|
17,348 |
|
|
|
42.4 |
|
|
|
84,401 |
|
|
|
59,404 |
|
|
|
42.1 |
|
General and administrative |
|
1,162 |
|
|
|
975 |
|
|
|
19.2 |
|
|
|
5,280 |
|
|
|
3,995 |
|
|
|
32.2 |
|
Restructuring |
|
- |
|
|
|
- |
|
|
n.m. |
|
|
|
- |
|
|
|
2,595 |
|
|
|
(100.0 |
) |
Adjusted EBITDA(1) |
|
6,274 |
|
|
|
5,297 |
|
|
|
18.4 |
|
|
|
23,807 |
|
|
|
11,257 |
|
|
|
111.5 |
|
Depreciation |
|
3,546 |
|
|
|
3,959 |
|
|
|
(10.4 |
) |
|
|
15,405 |
|
|
|
16,375 |
|
|
|
(5.9 |
) |
Loss (gain) on asset disposals |
|
26 |
|
|
|
(210 |
) |
|
|
(112.4 |
) |
|
|
(525 |
) |
|
|
(1,447 |
) |
|
|
(63.7 |
) |
Operating earnings (loss)(1) |
|
2,702 |
|
|
|
1,548 |
|
|
|
74.5 |
|
|
|
8,927 |
|
|
|
(3,671 |
) |
|
|
(343.2 |
) |
Operating earnings (loss)(1) as a percentage of revenue |
|
8.4 |
% |
|
|
6.6 |
% |
|
|
|
|
|
|
7.9 |
% |
|
|
(4.8 |
)% |
|
|
|
|
Well servicing statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of service rigs (end of period) |
|
123 |
|
|
|
123 |
|
|
|
- |
|
|
|
123 |
|
|
|
123 |
|
|
|
- |
|
Service rig operating hours |
|
33,063 |
|
|
|
27,286 |
|
|
|
21.2 |
|
|
|
126,840 |
|
|
|
81,952 |
|
|
|
54.8 |
|
Service rig operating hour utilization |
|
29 |
% |
|
|
24 |
% |
|
|
|
|
|
|
28 |
% |
|
|
18 |
% |
|
|
|
|
(1) See “NON-GAAP
MEASURES.”n.m. Not meaningful.
Completion and Production Services revenue for
the fourth quarter of 2021 increased to $32 million as compared
with $24 million in 2020. The higher revenue was primarily due to
increased average hourly service rates and activity. Our fourth
quarter service rig operating hours increased by 21% from 2020.
Approximately 78% of our fourth quarter Canadian service rig
activity was oil related.
During the quarter, Completion and Production
Services generated 11% of its revenue from U.S. operations compared
with 21% in the comparative period.
Operating costs as a percentage of revenue
increased to 77% as compared with 73% in the comparative quarter.
The higher percentage in 2021 was primarily the result of lower
CEWS program assistance. In the fourth quarter of 2021, we received
CEWS program assistance of $0.2 million as compared with $2 million
in 2020.
Our fourth quarter Adjusted EBITDA (see
“NON-GAAP MEASURES”) increased by $1 million as compared with 2020
primarily from increased average hourly service rates and
activity.
Depreciation expense in the quarter was 10%
lower than in 2020 primarily because of a lower capital asset base
as assets become fully depreciated, decommissioned or disposed.
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 (see “NON-GAAP MEASURES”) of
$11 million as compared with $14 million in the fourth quarter of
2020. Our Adjusted EBITDA was positively impacted by lower
share-based compensation costs, partially offset by lower CEWS
program assistance. During the quarter, CEWS program assistance
offset general and administrative costs by $0.1 million as compared
with $1 million in 2020.
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 2020 Annual
Report.
A summary of amounts expensed under these plans
during the reporting periods are as follows:
|
For the three months ended December 31, |
|
|
For the year ended December 31, |
|
(Stated in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Cash settled share-based incentive plans |
|
2,055 |
|
|
|
4,404 |
|
|
|
48,592 |
|
|
|
4,354 |
|
Equity settled share-based
incentive plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive PSU |
|
4,282 |
|
|
|
6,454 |
|
|
|
7,921 |
|
|
|
14,582 |
|
Stock option plan |
|
33 |
|
|
|
197 |
|
|
|
232 |
|
|
|
911 |
|
Total share-based incentive compensation plan expense |
|
6,370 |
|
|
|
11,055 |
|
|
|
56,745 |
|
|
|
19,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
1,551 |
|
|
|
2,057 |
|
|
|
12,988 |
|
|
|
3,811 |
|
General and Administrative |
|
4,819 |
|
|
|
8,998 |
|
|
|
43,757 |
|
|
|
16,036 |
|
|
|
6,370 |
|
|
|
11,055 |
|
|
|
56,745 |
|
|
|
19,847 |
|
Cash settled share-based compensation expense
for the quarter was $2 million as compared with $4 million in 2020.
The higher expense in 2020 was primarily due to the strengthening
of our share price for the quarter. Our equity settled share-based
compensation expense for the fourth quarter of 2021 decreased by $2
million as fewer Executive PSUs were outstanding as compared with
2020.
Finance Charges
Net finance charges were $21 million as compared
with $24 million in the fourth quarter of 2020. Our lower net
finance charges were primarily due to reduced interest expense from
lower debt levels and average cost of borrowings. Interest charges
on our U.S. denominated long-term debt in the fourth quarter of
2021 were US$15 million ($19 million) as compared with US$16
million ($21 million) in 2020.
Income Tax
Income tax expense for the quarter was $1
million as compared with $8 million in 2020. During the fourth
quarter of 2021 and 2020, we did not recognize deferred tax assets
on certain Canadian and international operating losses.
LIQUIDITY AND CAPITAL
RESOURCES
The oilfield services business is inherently
cyclical in nature. To manage this, we focus on maintaining a
strong balance sheet so we have the financial flexibility we need
to continue to manage our growth and cash flow, regardless of where
we are in the business cycle. We maintain a variable operating cost
structure so we can be responsive to changes in demand.
Our maintenance capital expenditures are tightly
governed and highly responsive to activity levels with additional
cost savings leverage provided through our internal manufacturing
and supply divisions. Term contracts on expansion capital for
new-build and upgrade rig programs provide more certainty of future
revenues and return on our capital investments.
Liquidity
Amount |
|
Availability |
|
Used for |
|
Maturity |
Senior credit facility (secured) |
|
|
|
|
|
|
US$500 million1 (extendible, revolvingterm credit facility with
US$300 million accordion feature) |
|
US$118 million drawn and US$33 million in outstanding letters of
credit |
|
General corporate purposes |
|
June 18, 20251 |
Real estate credit facilities (secured) |
|
|
|
|
|
|
US$10 million |
|
Fully drawn |
|
General corporate purposes |
|
November 19, 2025 |
$19 million |
|
Fully drawn |
|
General corporate purposes |
|
March 16, 2026 |
Operating facilities (secured) |
|
|
|
|
|
|
$40 million |
|
Undrawn, except $7 million inoutstanding letters of credit |
|
Letters of credit and generalcorporate purposes |
|
|
US$15 million |
|
Undrawn |
|
Short-term working capitalrequirements |
|
|
Demand letter of credit facility (secured) |
|
|
|
|
|
|
US$30 million |
|
Undrawn, except US$3 million inoutstanding letters of credit |
|
Letters of credit |
|
|
Unsecured senior notes (unsecured) |
|
|
|
|
|
|
US$348 million – 7.125% |
|
Fully drawn |
|
Debt redemption and repurchases |
|
January 15, 2026 |
US$400 million – 6.875% |
|
Fully drawn |
|
Debt redemption and repurchases |
|
January 15, 2029 |
(1) US$53 million expires on
November 21, 2023.
At December 31, 2021, we had $1,126 million
outstanding under our Senior Credit Facility, Real Estate Credit
Facilities and unsecured senior notes as compared with $1,250
million at December 31, 2020.
The current blended cash interest cost of our
debt is approximately 6.4%.
Senior Credit Facility
The Senior Credit Facility requires we comply
with certain covenants including a leverage ratio of consolidated
senior debt to consolidated Covenant EBITDA (see “NON-GAAP
MEASURES”) of less than 2.5:1. For purposes of calculating the
leverage ratio consolidated senior debt only includes secured
indebtedness.
On June 18, 2021, we agreed with the lenders of
our Senior Credit Facility to extend the facility’s maturity date
and extend and amend certain financial covenants during the
Covenant Relief Period. The maturity date of the Senior Credit
Facility was extended to June 18, 2025; however, US$53 million of
the US$500 million will expire on November 21, 2023.
The lenders agreed to extend the Covenant Relief
Period to September 30, 2022 and amend the consolidated Covenant
EBITDA to consolidated interest coverage ratio for the most recent
four consecutive quarters to be greater than or equal to 2.0:1, for
the periods ending December 31, 2021 and March 31, 2022, 2.25:1 for
the periods ending June 30, 2022 and September 30, 2022 and 2.5:1
for periods ending thereafter.
During the Covenant Relief Period, our
distributions in the form of dividends, distributions and share
repurchases are restricted to a maximum of US$25 million in each of
2021 and 2022, subject to a pro forma senior net leverage ratio (as
defined in the credit agreement) of less than or equal to
1.75:1.
During 2021, the North American and acceptable
secured foreign assets must directly account for at least 65% of
consolidated Covenant EBITDA calculated quarterly on a rolling
twelve-month basis, increasing to 70% thereafter. We also have the
option to voluntarily terminate the Covenant Relief Period prior to
September 30, 2022.
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.
The Senior Credit Facility contains certain
covenants that place restrictions on our ability to incur or assume
additional indebtedness; dispose of assets; change our primary
business; incur liens on assets; engage in transactions with
affiliates; enter into mergers, consolidations or amalgamations;
and enter into speculative swap agreements.
Unsecured Senior Notes
The unsecured senior notes require that we
comply with restrictive and financial covenants including an
incurrence based consolidated interest coverage ratio test of
consolidated cash flow, as defined in the senior note agreements,
to consolidated interest expense of greater than 2.0:1 for the most
recent four consecutive fiscal quarters. In the event our
consolidated interest coverage ratio is less than 2.0:1 for the
most recent four consecutive fiscal quarters, the unsecured senior
notes restrict our ability to incur additional indebtedness.
The unsecured senior notes contain a restricted
payment covenant that limits our ability to make payments in the
nature of dividends, distributions and for share repurchases from
shareholders. This restricted payment basket grows from a starting
point of October 1, 2017 for the 2026 unsecured senior notes and
from July 1, 2021 for the 2029 unsecured senior notes by, among
other things, 50% of consolidated cumulative net earnings and
decreases by 100% of consolidated cumulative net losses, as defined
in the senior note agreements, and payments made to shareholders.
The governing net restricted payments basket is currently negative,
limiting our ability to declare and make dividend payments until
such time as the restricted payments baskets become positive.
In addition, the unsecured senior notes contain
certain covenants that limit our ability, and the ability of
certain subsidiaries, to incur additional indebtedness and issue
preferred shares; create liens; create or permit to exist
restrictions on our ability or certain subsidiaries’ to make
certain payments and distributions; engage in amalgamations,
mergers or consolidations; make certain dispositions; and engage in
transactions with affiliates.
For further information, please see the
unsecured senior note indentures which are available on SEDAR and
EDGAR.
Real Estate Credit Facilities
Our Canadian Real Estate Credit Facility is
secured by real properties in Alberta, Canada. Principal plus
interest payments are due quarterly, based on 15-year straight-line
amortization with any unpaid principal and accrued interest due at
maturity. Interest is calculated using a CDOR rate plus margin.
Our U.S. Real Estate Credit Facility is secured
by real property located in Houston, Texas. Principal plus interest
payments are due monthly, based on 15-year straight-line
amortization with any unpaid principal and accrued interest due at
maturity. Interest is calculated using a LIBOR rate plus
margin.
Our Real Estate Credit Facilities contain
certain affirmative and negative covenants and events of default,
customary for these types of transactions. Under the terms of these
facilities, we must maintain financial covenants in accordance with
the Senior Credit Facility, described above, as of the last day of
each period of four consecutive fiscal quarters. For the Canadian
Real Estate Credit Facility, in the event the Senior Credit
Facility expires, is cancelled or is terminated, financial
covenants in effect at that time shall remain in place for the
remaining duration of the facility. For the U.S. Real Estate Credit
Facility, in the event the consolidated Covenant EBITDA to
consolidated interest expense coverage ratio is waived or removed
from the Senior Credit Facility, a minimum threshold of 1.15:1 is
required.
Covenants
At December 31, 2021, we were in compliance with
the covenants of our Senior Credit Facility and Real Estate Credit
Facilities.
|
Covenant |
|
At December 31, 2021 |
|
Senior Credit Facility |
|
|
|
|
|
Consolidated senior debt to consolidated covenant EBITDA(1) |
< 2.50 |
|
|
0.97 |
|
Consolidated covenant EBITDA to consolidated interest expense |
> 2.00 |
|
|
2.83 |
|
Real Estate Credit
Facilities |
|
|
|
|
|
Consolidated covenant EBITDA to consolidated interest expense |
> 2.00 |
|
|
2.83 |
|
(1) For purposes of calculating the leverage ratio consolidated
senior debt only includes secured indebtedness.
Impact of foreign exchange
rates
The strengthening of the Canadian dollar during
2021 resulted in lower translated U.S. denominated revenue and
costs. On average, for the three and twelve months ended December
31, 2021, the Canadian dollar strengthened by 3% and 7%,
respectively, from the comparable 2020 periods. The following table
summarizes the average and closing Canada-U.S. foreign exchanges
rates.
|
For the three months endedDecember 31, |
|
|
For the year endedDecember 31, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Canada-U.S. foreign exchange rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
1.26 |
|
|
|
1.30 |
|
|
|
1.25 |
|
|
|
1.34 |
|
Closing |
|
1.26 |
|
|
|
1.27 |
|
|
|
1.26 |
|
|
|
1.27 |
|
Average shares outstanding
The following table reconciles the weighted
average shares outstanding used in computing basic and diluted net
loss per share:
|
For the three months endedDecember 31, |
|
|
For the year endedDecember 31, |
|
(Stated in thousands) |
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Weighted average shares outstanding – basic |
|
13,304 |
|
|
|
13,679 |
|
|
|
13,315 |
|
|
|
13,722 |
|
Effect
of stock options and other equity compensation plans |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Weighted average shares outstanding – diluted |
|
13,304 |
|
|
|
13,679 |
|
|
|
13,315 |
|
|
|
13,722 |
|
QUARTERLY FINANCIAL SUMMARY
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2021 |
|
Quarters ended |
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
Revenue |
|
|
236,473 |
|
|
|
201,359 |
|
|
|
253,813 |
|
|
|
295,202 |
|
Adjusted EBITDA(1) |
|
|
54,539 |
|
|
|
28,944 |
|
|
|
45,408 |
|
|
|
63,881 |
|
Net loss |
|
|
(36,106 |
) |
|
|
(75,912 |
) |
|
|
(38,032 |
) |
|
|
(27,336 |
) |
Net loss per basic and diluted
share |
|
|
(2.70 |
) |
|
|
(5.71 |
) |
|
|
(2.86 |
) |
|
|
(2.05 |
) |
Funds provided by
operations(1) |
|
|
43,430 |
|
|
|
12,607 |
|
|
|
33,525 |
|
|
|
62,681 |
|
Cash
provided by operations |
|
|
15,422 |
|
|
|
42,219 |
|
|
|
21,871 |
|
|
|
59,713 |
|
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2020 |
|
Quarters ended |
|
March 31 |
|
|
June 30 |
|
September 30 |
|
|
December 31 |
|
Revenue |
|
|
379,484 |
|
|
|
189,759 |
|
|
|
164,822 |
|
|
|
201,688 |
|
Adjusted EBITDA(1) |
|
|
101,904 |
|
|
|
58,465 |
|
|
|
47,771 |
|
|
|
55,263 |
|
Net loss |
|
|
(5,277 |
) |
|
|
(48,867 |
) |
|
|
(28,476 |
) |
|
|
(37,518 |
) |
Net loss per basic and diluted
share |
|
|
(0.38 |
) |
|
|
(3.56 |
) |
|
|
(2.08 |
) |
|
|
(2.74 |
) |
Funds provided by
operations(1) |
|
|
81,317 |
|
|
|
26,639 |
|
|
|
27,489 |
|
|
|
35,282 |
|
Cash
provided by operations |
|
|
74,953 |
|
|
|
104,478 |
|
|
|
41,950 |
|
|
|
4,737 |
|
(1) See “NON-GAAP
MEASURES.”
NON-GAAP MEASURES
In this release, we reference non-GAAP
(Generally Accepted Accounting Principles) measures. Adjusted
EBITDA, Covenant EBITDA, Operating Earnings (Loss), Funds Provided
by (Used in) Operations and Working Capital are terms used by us to
assess performance as we believe they provide useful supplemental
information to investors. 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.
Adjusted EBITDA
We believe that Adjusted EBITDA (earnings before
income taxes, loss (gain) on repurchase of unsecured senior notes,
loss (gain) on investments and other assets, finance charges,
foreign exchange, gain on assets disposals and depreciation and
amortization), as reported in the Interim Consolidated Statement of
Net Loss, 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.
Covenant EBITDA
Covenant EBITDA, as defined in our Senior Credit
Facility agreement, is used in determining the Corporation’s
compliance with its covenants. Covenant EBITDA differs from
Adjusted EBITDA by the exclusion of bad debt expense, restructuring
costs, certain foreign exchange amounts and the deduction of cash
lease payments incurred after December 31, 2018.
Operating Earnings (Loss)
We believe that operating earnings (loss) is a
useful measure because it provides an indication of the results of
our principal business activities before consideration of how those
activities are financed and the impact of foreign exchange and
taxation. Operating earnings (loss) is calculated as follows:
|
For the three months endedDecember 31, |
|
|
For the year endedDecember 31, |
|
(Stated
in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue |
|
295,202 |
|
|
|
201,688 |
|
|
|
986,847 |
|
|
|
935,753 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
212,146 |
|
|
|
125,494 |
|
|
|
698,144 |
|
|
|
583,420 |
|
General and administrative |
|
19,175 |
|
|
|
20,931 |
|
|
|
95,931 |
|
|
|
70,869 |
|
Restructuring |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,061 |
|
Depreciation and
amortization |
|
71,178 |
|
|
|
74,696 |
|
|
|
282,326 |
|
|
|
316,322 |
|
Gain on
asset disposals |
|
(2,292 |
) |
|
|
(1,820 |
) |
|
|
(8,516 |
) |
|
|
(11,931 |
) |
Operating loss |
|
(5,005 |
) |
|
|
(17,613 |
) |
|
|
(81,038 |
) |
|
|
(40,988 |
) |
Foreign exchange |
|
289 |
|
|
|
1,618 |
|
|
|
393 |
|
|
|
4,542 |
|
Finance charges |
|
20,648 |
|
|
|
24,192 |
|
|
|
91,431 |
|
|
|
107,468 |
|
Loss on investments and other
assets |
|
727 |
|
|
|
— |
|
|
|
400 |
|
|
|
— |
|
Loss
(gain) on repurchase of unsecured notes |
|
— |
|
|
|
(13,872 |
) |
|
|
9,520 |
|
|
|
(43,814 |
) |
Loss before income taxes |
|
(26,669 |
) |
|
|
(29,551 |
) |
|
|
(182,782 |
) |
|
|
(109,184 |
) |
Funds Provided By (Used In)
Operations
We believe that funds provided by (used in)
operations, as reported in the Interim Consolidated Statements of
Cash Flow, is a useful measure because it provides an indication of
the funds our principal business activities generate prior to
consideration of working capital, which is primarily made up of
highly liquid balances.
Working Capital
We define working capital as current assets less
current liabilities as reported on the Interim Consolidated
Statement of Financial Position.
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 2022;
- our capital expenditures, free cash flow allocation and debt
reduction plan for 2022;
- anticipated activity levels in 2022;
- anticipated demand for our drilling rigs;
- the average number of term contracts in place for 2022;
- customer adoption of Alpha™ digital technologies and
EverGreen™ environmental solutions;
- 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:
- 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;
- 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 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,
2020, 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) |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
40,588 |
|
|
$ |
108,772 |
|
Accounts receivable |
|
|
255,740 |
|
|
|
207,209 |
|
Inventory |
|
|
23,429 |
|
|
|
26,282 |
|
Total current assets |
|
|
319,757 |
|
|
|
342,263 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
867 |
|
|
|
1,098 |
|
Right-of-use assets |
|
|
51,440 |
|
|
|
55,168 |
|
Property, plant and equipment |
|
|
2,258,391 |
|
|
|
2,472,683 |
|
Intangibles |
|
|
23,915 |
|
|
|
27,666 |
|
Investments and other assets |
|
|
7,382 |
|
|
|
— |
|
Total non-current assets |
|
|
2,341,995 |
|
|
|
2,556,615 |
|
Total assets |
|
$ |
2,661,752 |
|
|
$ |
2,898,878 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
224,123 |
|
|
$ |
150,957 |
|
Income taxes payable |
|
|
839 |
|
|
|
3,702 |
|
Current portion of lease obligations |
|
|
10,935 |
|
|
|
11,285 |
|
Current portion of long-term debt |
|
|
2,223 |
|
|
|
896 |
|
Total current liabilities |
|
|
238,120 |
|
|
|
166,840 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
26,728 |
|
|
|
11,507 |
|
Provisions and other |
|
|
6,513 |
|
|
|
7,563 |
|
Lease obligations |
|
|
45,823 |
|
|
|
48,882 |
|
Long-term debt |
|
|
1,106,794 |
|
|
|
1,236,210 |
|
Deferred tax liabilities |
|
|
12,219 |
|
|
|
21,236 |
|
Total non-current liabilities |
|
|
1,198,077 |
|
|
|
1,325,398 |
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Shareholders’ capital |
|
|
2,281,444 |
|
|
|
2,285,738 |
|
Contributed surplus |
|
|
76,311 |
|
|
|
72,915 |
|
Deficit |
|
|
(1,266,980 |
) |
|
|
(1,089,594 |
) |
Accumulated other comprehensive income |
|
|
134,780 |
|
|
|
137,581 |
|
Total shareholders’ equity |
|
|
1,225,555 |
|
|
|
1,406,640 |
|
Total liabilities and shareholders’ equity |
|
$ |
2,661,752 |
|
|
$ |
2,898,878 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF NET LOSS (UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
(Stated
in thousands of Canadian dollars, except per share amounts) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
295,202 |
|
|
$ |
201,688 |
|
|
$ |
986,847 |
|
|
$ |
935,753 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
|
212,146 |
|
|
|
125,494 |
|
|
|
698,144 |
|
|
|
583,420 |
|
General and administrative |
|
|
19,175 |
|
|
|
20,931 |
|
|
|
95,931 |
|
|
|
70,869 |
|
Restructuring |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,061 |
|
Earnings before income taxes, loss (gain) on repurchase of
unsecured senior notes, loss on investments and other assets,
finance charges, foreign exchange, gain on asset disposals and
depreciation and amortization |
|
|
63,881 |
|
|
|
55,263 |
|
|
|
192,772 |
|
|
|
263,403 |
|
Depreciation and amortization |
|
|
71,178 |
|
|
|
74,696 |
|
|
|
282,326 |
|
|
|
316,322 |
|
Gain on
asset disposals |
|
|
(2,292 |
) |
|
|
(1,820 |
) |
|
|
(8,516 |
) |
|
|
(11,931 |
) |
Foreign
exchange |
|
|
289 |
|
|
|
1,618 |
|
|
|
393 |
|
|
|
4,542 |
|
Finance
charges |
|
|
20,648 |
|
|
|
24,192 |
|
|
|
91,431 |
|
|
|
107,468 |
|
Loss on
investments and other assets |
|
|
727 |
|
|
|
— |
|
|
|
400 |
|
|
|
— |
|
Loss (gain) on repurchase of unsecured senior notes |
|
|
— |
|
|
|
(13,872 |
) |
|
|
9,520 |
|
|
|
(43,814 |
) |
Loss before income taxes |
|
|
(26,669 |
) |
|
|
(29,551 |
) |
|
|
(182,782 |
) |
|
|
(109,184 |
) |
Income
taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
741 |
|
|
|
(831 |
) |
|
|
3,203 |
|
|
|
5,290 |
|
Deferred |
|
|
(74 |
) |
|
|
8,798 |
|
|
|
(8,599 |
) |
|
|
5,664 |
|
|
|
|
667 |
|
|
|
7,967 |
|
|
|
(5,396 |
) |
|
|
10,954 |
|
Net loss |
|
$ |
(27,336 |
) |
|
$ |
(37,518 |
) |
|
$ |
(177,386 |
) |
|
$ |
(120,138 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.05 |
) |
|
$ |
(2.74 |
) |
|
$ |
(13.32 |
) |
|
$ |
(8.76 |
) |
Diluted |
|
$ |
(2.05 |
) |
|
$ |
(2.74 |
) |
|
$ |
(13.32 |
) |
|
$ |
(8.76 |
) |
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net loss |
|
$ |
(27,336 |
) |
|
$ |
(37,518 |
) |
|
$ |
(177,386 |
) |
|
$ |
(120,138 |
) |
Unrealized loss on translation of assets and
liabilities of operations denominated in foreign currency |
|
|
(2,074 |
) |
|
|
(75,238 |
) |
|
|
(11,256 |
) |
|
|
(25,925 |
) |
Foreign exchange gain (loss) on net investment hedge
with U.S. denominated debt |
|
|
1,460 |
|
|
|
58,685 |
|
|
|
8,455 |
|
|
|
23,853 |
|
Tax expense related to net investment hedge of long- term debt |
|
|
— |
|
|
|
5,398 |
|
|
|
— |
|
|
|
5,398 |
|
Comprehensive loss |
|
$ |
(27,950 |
) |
|
$ |
(48,673 |
) |
|
$ |
(180,187 |
) |
|
$ |
(116,812 |
) |
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(27,336 |
) |
|
$ |
(37,518 |
) |
|
$ |
(177,386 |
) |
|
$ |
(120,138 |
) |
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term compensation plans |
|
|
3,264 |
|
|
|
9,042 |
|
|
|
31,952 |
|
|
|
17,769 |
|
Depreciation and amortization |
|
|
71,178 |
|
|
|
74,696 |
|
|
|
282,326 |
|
|
|
316,322 |
|
Gain on
asset disposals |
|
|
(2,292 |
) |
|
|
(1,820 |
) |
|
|
(8,516 |
) |
|
|
(11,931 |
) |
Foreign
exchange |
|
|
296 |
|
|
|
2,361 |
|
|
|
1,733 |
|
|
|
4,808 |
|
Finance
charges |
|
|
20,648 |
|
|
|
24,192 |
|
|
|
91,431 |
|
|
|
107,468 |
|
Income
taxes |
|
|
667 |
|
|
|
7,967 |
|
|
|
(5,396 |
) |
|
|
10,954 |
|
Other |
|
|
(410 |
) |
|
|
(1,487 |
) |
|
|
(972 |
) |
|
|
(2,392 |
) |
Loss on
investments and other assets |
|
|
727 |
|
|
|
— |
|
|
|
400 |
|
|
|
— |
|
Loss
(gain) on repurchase of unsecured senior notes |
|
|
— |
|
|
|
(13,872 |
) |
|
|
9,520 |
|
|
|
(43,814 |
) |
Income
taxes paid |
|
|
(799 |
) |
|
|
(383 |
) |
|
|
(5,999 |
) |
|
|
(6,468 |
) |
Income
taxes recovered |
|
|
1 |
|
|
|
157 |
|
|
|
48 |
|
|
|
1,385 |
|
Interest
paid |
|
|
(3,276 |
) |
|
|
(28,164 |
) |
|
|
(67,258 |
) |
|
|
(103,851 |
) |
Interest received |
|
|
13 |
|
|
|
111 |
|
|
|
360 |
|
|
|
615 |
|
Funds provided by operations |
|
|
62,681 |
|
|
|
35,282 |
|
|
|
152,243 |
|
|
|
170,727 |
|
Changes in non-cash working capital balances |
|
|
(2,968 |
) |
|
|
(30,545 |
) |
|
|
(13,018 |
) |
|
|
55,391 |
|
|
|
|
59,713 |
|
|
|
4,737 |
|
|
|
139,225 |
|
|
|
226,118 |
|
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property, plant and equipment |
|
|
(27,750 |
) |
|
|
(22,912 |
) |
|
|
(75,941 |
) |
|
|
(61,535 |
) |
Purchase
of intangibles |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57 |
) |
Proceeds
on sale of property, plant and
equipment |
|
|
2,696 |
|
|
|
4,678 |
|
|
|
13,086 |
|
|
|
21,094 |
|
Purchase
of investments and other assets |
|
|
(500 |
) |
|
|
— |
|
|
|
(3,500 |
) |
|
|
— |
|
Changes in non-cash working capital balances |
|
|
6,529 |
|
|
|
6,754 |
|
|
|
9,742 |
|
|
|
(19 |
) |
|
|
|
(19,025 |
) |
|
|
(11,480 |
) |
|
|
(56,613 |
) |
|
|
(40,517 |
) |
Financing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of long-term debt |
|
|
— |
|
|
|
23,007 |
|
|
|
696,341 |
|
|
|
151,066 |
|
Repayments of long-term debt |
|
|
(55,203 |
) |
|
|
(73,726 |
) |
|
|
(824,871 |
) |
|
|
(278,112 |
) |
Repurchase of share capital |
|
|
— |
|
|
|
(6,058 |
) |
|
|
(4,294 |
) |
|
|
(11,317 |
) |
Debt
issuance costs |
|
|
— |
|
|
|
(354 |
) |
|
|
(9,450 |
) |
|
|
(354 |
) |
Debt
amendment fees |
|
|
— |
|
|
|
— |
|
|
|
(913 |
) |
|
|
(690 |
) |
Lease
payments |
|
|
(1,763 |
) |
|
|
(605 |
) |
|
|
(6,726 |
) |
|
|
(6,217 |
) |
|
|
|
(56,966 |
) |
|
|
(57,736 |
) |
|
|
(149,913 |
) |
|
|
(145,624 |
) |
Effect of exchange rate changes on cash |
|
|
(230 |
) |
|
|
(4,534 |
) |
|
|
(883 |
) |
|
|
(5,906 |
) |
Increase (decrease) in cash |
|
|
(16,508 |
) |
|
|
(69,013 |
) |
|
|
(68,184 |
) |
|
|
34,071 |
|
Cash, beginning of period |
|
|
57,096 |
|
|
|
177,785 |
|
|
|
108,772 |
|
|
|
74,701 |
|
Cash, end of period |
|
$ |
40,588 |
|
|
$ |
108,772 |
|
|
$ |
40,588 |
|
|
$ |
108,772 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome(Note 12) |
|
|
Deficit |
|
|
TotalEquity |
|
Balance at January 1, 2021 |
|
$ |
2,285,738 |
|
|
$ |
72,915 |
|
|
$ |
137,581 |
|
|
$ |
(1,089,594 |
) |
|
$ |
1,406,640 |
|
Net loss
for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(177,386 |
) |
|
|
(177,386 |
) |
Other
comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
(2,801 |
) |
|
|
— |
|
|
|
(2,801 |
) |
Share
repurchases |
|
|
(4,294 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,294 |
) |
Share-based compensation reclassification |
|
|
— |
|
|
|
(4,757 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,757 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
8,153 |
|
|
|
— |
|
|
|
— |
|
|
|
8,153 |
|
Balance at December 31, 2021 |
|
$ |
2,281,444 |
|
|
$ |
76,311 |
|
|
$ |
134,780 |
|
|
$ |
(1,266,980 |
) |
|
$ |
1,225,555 |
|
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome |
|
|
Deficit |
|
|
TotalEquity |
|
Balance at January 1, 2020 |
|
$ |
2,296,378 |
|
|
$ |
66,255 |
|
|
$ |
134,255 |
|
|
$ |
(969,456 |
) |
|
$ |
1,527,432 |
|
Net loss
for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(120,138 |
) |
|
|
(120,138 |
) |
Other
comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
3,326 |
|
|
|
— |
|
|
|
3,326 |
|
Share
repurchases |
|
|
(11,317 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,317 |
) |
Redemption of non-management director DSUs |
|
|
677 |
|
|
|
(502 |
) |
|
|
— |
|
|
|
— |
|
|
|
175 |
|
Share-based compensation reclassification |
|
|
— |
|
|
|
(8,331 |
) |
|
|
— |
|
|
|
— |
|
|
|
(8,331 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
15,493 |
|
|
|
— |
|
|
|
— |
|
|
|
15,493 |
|
Balance at December 31, 2020 |
|
$ |
2,285,738 |
|
|
$ |
72,915 |
|
|
$ |
137,581 |
|
|
$ |
(1,089,594 |
) |
|
$ |
1,406,640 |
|
FOURTH QUARTER AND END OF YEAR 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, February 10, 2022.
The conference call dial in numbers are
1-844-515-9176 or 614-999-9312 (International) or a live webcast is
accessible on our website at
www.precisiondrilling.com.
An archived version of the webcast will be
available for approximately 60 days. An archived recording of the
conference call will be available approximately one hour after the
completion of the call until February 14, 2022 by dialing
855-859-2056 or 404-537-3406, passcode 8456974.
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:
Carey Ford, Senior Vice President and Chief
Financial Officer713.435.6100
800, 525 - 8th Avenue S.W.Calgary, Alberta,
Canada T2P 1G1Website: www.precisiondrilling.com
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