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, 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 first quarter
financial results:
- All key financial
metrics including revenue, daily operating margins(1), Adjusted
EBITDA(2), and net earnings exceeded results from the same period
last year and the fourth quarter of 2022, supported by stronger
drilling activity and pricing increases in the U.S. and
Canada.
- Precision’s North
American drilling activity grew 13% over the first quarter of
2022.
- Revenue was $559
million, an increase of 59% over the first quarter of 2022 and 9%
sequentially.
- Revenue per
utilization day reached US$34,963 in the U.S. and $32,304 in
Canada, while daily operating margins(1) increased to US$14,692 in
the U.S. and $13,558 in Canada as drilling rigs continued to
reprice at higher day rates.
- Precision continued
to scale its Alpha™ and EverGreen™ product lines across its Super
Triple rig fleet and grew revenue from these technological and
environmental offerings by over 60% from the first quarter of
2022.
- Adjusted EBITDA(2)
increased to $203 million, significantly higher than the $37
million reported in the first quarter of 2022, and included a
recovery from share-based compensation plans of $12 million
compared to an expense of $48 million in the comparative
quarter.
- Net earnings were
$96 million or $7.02 per share compared with a net loss of $44
million or a $3.25 loss per share in the first quarter of
2022.
- Cash provided by
operations was $28 million versus cash used in operations of $65
million in the first quarter of 2022. Funds provided by
operations(2) was $160 million compared to $30 million in the
comparative quarter.
- Precision remains
committed to its 2023 debt reduction target of $150 million and its
longer-term targets of reducing debt by $500 million between 2022
and 2025 and achieving a normalized Net Debt to Adjusted EBITDA(2)
ratio of less than 1.0 times by the end of 2025.
- Returned $5 million
of capital to shareholders through share repurchases.
- Ended the quarter
with $42 million of cash and approximately $540 million of
available liquidity.
- Completion and
Production Services generated revenue of $75 million and Adjusted
EBITDA(2) of $17 million, representing increases of 95% and 166%,
respectively, from the first quarter of 2022. Precision
successfully integrated its 2022 High Arctic acquisition into its
operations and is on track to achieve synergies of $5 million, on
an annualized basis, in the second quarter.
- Internationally, we
have five rigs currently active in the Middle East, increasing to
eight by the middle of 2023 as we complete rig recertifications.
These eight contracts represent approximately $755 million in
backlog revenue that stretches into 2028.
- In April, Precision
committed to a $5 million equity investment in CleanDesign Income
Corp. (CleanDesign), a key supplier of Precision’s
EverGreen™ Battery Energy Storage Systems (BESS).
The investment provides Precision with key BESS and power
management technologies and is aligned with the Company’s overall
emissions reduction strategy.
- Precision decreased
its 2023 capital spending budget to $195 million as compared to its
initial budget of $235 million. The decrease mainly reflects fewer
drilling rig upgrades and lower maintenance
costs.(1) Revenue less operating costs
per utilization day.(2) See “FINANCIAL
MEASURES AND RATIOS.”
Precision’s President and CEO, Kevin Neveu,
stated:
“Precision’s financial results exceeded
expectations, delivering the highest first quarter revenue,
Adjusted EBITDA, and net earnings since 2014, demonstrating our
customers’ desire for our High Performance, High Value services and
the earnings power of our Super Series fleet. During the quarter,
we continued to expand margins, scaled our Alpha™ digital
technologies and EverGreen™ suite of environmental solutions, and
maintained strict cost control. Our efforts delivered returns to
shareholders as we generated $7.02 of net earnings on a per-share
basis.
“Precision’s current activity levels remain
strong with 57 rigs running in the U.S. compared to 55 at the same
time last year. First quarter activity was 17% higher, with
normalized average day rates almost US$12,000 above day rates for
the same period last year. In Canada, we are currently operating 38
rigs, which is 15% higher than the same time last year. Our first
quarter activity was 9% higher than last year, with average day
rates approximately $8,000 higher. In the Middle East, we are back
to five rigs operating again, about one month ahead of plan, and
expect to be running eight rigs by mid-year, slightly ahead of
plan.
“We are confident in our business, both in the
current year and long-term. Land drilling fundamentals remain
strong, Super-Spec rig availability is tight, and Canadian drilling
and completions momentum continues to build as the Trans Mountain
Expansion project for oil export and the LNG Canada project for
natural gas export are nearing completion. Although lower gas
prices have introduced some uncertainty in the U.S., we expect this
market to strengthen in the second half of the year.
“In 2023, we will continue to focus on what we
can control, delivering High Performance, High Value service,
maximizing free cash flow through margin expansion and revenue
efficiency, scaling our Alpha™ and EverGreen™ offerings, and
strengthening our balance sheet. I am confident that we will
successfully execute these strategic priorities and continue to
deliver returns for our shareholders,” concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING
INFORMATION
Financial Highlights
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars, except per share amounts) |
2023 |
|
|
2022 |
|
|
% Change |
|
Revenue |
|
558,607 |
|
|
|
351,339 |
|
|
|
59.0 |
|
Adjusted EBITDA(1) |
|
203,219 |
|
|
|
36,855 |
|
|
|
451.4 |
|
Net earnings (loss) |
|
95,830 |
|
|
|
(43,844 |
) |
|
|
(318.6 |
) |
Cash provided by (used in)
operations |
|
28,356 |
|
|
|
(65,294 |
) |
|
|
(143.4 |
) |
Funds provided by
operations(1) |
|
159,653 |
|
|
|
29,955 |
|
|
|
433.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing
activities |
|
78,817 |
|
|
|
30,343 |
|
|
|
159.8 |
|
Capital spending by spend
category(1) |
|
|
|
|
|
|
|
|
|
|
|
Expansion and upgrade |
|
16,345 |
|
|
|
9,615 |
|
|
|
70.0 |
|
Maintenance and infrastructure |
|
34,450 |
|
|
|
26,787 |
|
|
|
28.6 |
|
Proceeds on sale |
|
(7,765 |
) |
|
|
(2,847 |
) |
|
|
172.7 |
|
Net capital spending(1) |
|
43,030 |
|
|
|
33,555 |
|
|
|
28.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
7.02 |
|
|
|
(3.25 |
) |
|
|
(316.0 |
) |
Diluted |
|
5.57 |
|
|
|
(3.25 |
) |
|
|
(271.4 |
) |
(1) See “FINANCIAL
MEASURES AND RATIOS.”
Operating Highlights
|
For the three months ended March 31, |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
Contract drilling rig fleet |
|
225 |
|
|
|
227 |
|
|
|
(0.9 |
) |
Drilling rig utilization
days: |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
5,382 |
|
|
|
4,590 |
|
|
|
17.3 |
|
Canada |
|
6,168 |
|
|
|
5,653 |
|
|
|
9.1 |
|
International |
|
433 |
|
|
|
540 |
|
|
|
(19.8 |
) |
Revenue per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
U.S. (US$) |
|
34,963 |
|
|
|
24,299 |
|
|
|
43.9 |
|
Canada (Cdn$) |
|
32,304 |
|
|
|
24,263 |
|
|
|
33.1 |
|
International (US$) |
|
51,753 |
|
|
|
50,235 |
|
|
|
3.0 |
|
Operating costs per
utilization day: |
|
|
|
|
|
|
|
|
|
|
|
U.S. (US$) |
|
20,271 |
|
|
|
18,370 |
|
|
|
10.3 |
|
Canada (Cdn$) |
|
18,746 |
|
|
|
15,398 |
|
|
|
21.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service rig fleet |
|
118 |
|
|
|
123 |
|
|
|
(4.1 |
) |
Service
rig operating hours |
|
58,341 |
|
|
|
38,265 |
|
|
|
52.5 |
|
Financial Position
(Stated in thousands of Canadian dollars, except ratios) |
March 31, 2023 |
|
|
December 31, 2022 |
|
Working capital(1) |
|
248,848 |
|
|
|
60,641 |
|
Cash |
|
41,619 |
|
|
|
21,587 |
|
Long-term debt |
|
1,161,626 |
|
|
|
1,085,970 |
|
Total long-term financial
liabilities |
|
1,238,741 |
|
|
|
1,206,619 |
|
Total assets |
|
2,891,399 |
|
|
|
2,876,123 |
|
Long-term debt to long-term debt plus equity ratio (1) |
|
0.46 |
|
|
|
0.47 |
|
(1) See “FINANCIAL
MEASURES AND RATIOS.”
Summary for the three months ended March 31,
2023:
- Revenue of $559
million was 59% higher than in 2022 and the result of increased
North American drilling and service activity and day rates,
partially offset by lower international activity. Drilling rig
utilization days increased 17% in the U.S. and 9% in Canada, and
well service activity increased 53% as compared with the first
quarter of 2022.
- Adjusted EBITDA was
$203 million, $166 million higher than 2022, mainly due to
increased activity and day rates and lower share-based
compensation. Share-based compensation recovery was $12 million,
approximately $60 million lower than in 2022 as a result of our
lower share price. 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 36% as compared with 10% in 2022.
- General and
administrative expenses were $16 million, $40 million lower than in
2022 due to lower share-based compensation charges.
- Net finance charges
were $23 million, an increase of $2 million from 2022 due to higher
variable interest rates and the impact of the weakening of the
Canadian dollar on our U.S. dollar denominated interest.
- Our U.S. revenue
per utilization day was US$34,963 compared with US$24,299 in 2022.
The increase was primarily the result of higher fleet average day
rates, partially offset by lower turnkey revenue. We recognized
revenue from turnkey projects of US$7 million compared with US$12
million in 2022. Revenue per utilization day, excluding the impact
of turnkey, was US$33,721, compared to US$21,765 in the previous
quarter, an increase of $11,956 or 55%. Revenue per utilization
day, excluding turnkey revenue, increased US$3,169 from the fourth
quarter of 2022.
- Our U.S. operating
costs per utilization day increased to US$20,271, compared with
US$18,370 in 2022 due to higher repairs and maintenance costs and
field wages, partially offset by lower turnkey activity. Operating
costs per utilization day, excluding turnkey, were US$19,421
compared with US$16,095 in the previous quarter. Sequentially,
excluding the impact of turnkey activity, operating costs per
utilization day increased US$766.
- In Canada, revenue
per utilization day was $32,304 compared with $24,263 in 2022. The
increase was a result of higher day rates and increased labor and
cost recoveries. Sequentially, revenue per utilization day
increased $2,418.
- Our Canadian
operating costs per utilization day increased to $18,746, compared
with $15,398 in 2022, due to higher field wages and repairs and
maintenance expenses. Sequentially, our daily operating costs
increased $1,208.
- Completion and
Production Services revenue and Adjusted EBITDA were $75 million
and $17 million, respectively, compared with $38 million and $7
million in 2022.
- We realized US$22
million of international contract drilling revenue compared with
US$27 million in 2022.
- Cash provided by
operations was $28 million compared with cash used in operations of
$65 million in 2022. We generated $160 million of funds provided by
operations compared with $30 million in 2022. Our increased
activity, revenue efficiency, operational leverage and day rates
contributed to higher cash generation in the current quarter.
- Capital
expenditures were $51 million compared with $36 million in 2022.
Capital spending by spend category (see “FINANCIAL MEASURES AND
RATIOS”) included $16 million for expansion and upgrades and $35
million for the maintenance of existing assets and
infrastructure.
- We ended the
quarter with $42 million of cash and approximately $540 million of
available liquidity.
STRATEGY
Precision’s 2023 strategic priorities and the
progress made during the first quarter are as follows:
-
Deliver High Performance, High
Value service through operational
excellence.
- Grew our average
active rig count by 17% in the U.S. and 9% in Canada as compared
with the same period last year.
- Increased service
rig operating hours 53% over the first quarter of 2022. 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 services in Canada.
- Reinvested $51
million into our equipment and infrastructure and expect a total
investment of $195 million in 2023.
- Subsequent to
quarter end, we committed to a $5 million equity investment in
CleanDesign, a key supplier of our EverGreenTM BESS. The investment
provides Precision with key BESS and power management technologies
and is aligned with the Company’s overall ESG strategy.
- Maximize
free cash flow by increasing Adjusted EBITDA margins, revenue
efficiency, and growing revenue from
AlphaTM technologies and
EverGreenTM suite of
environmental solutions.
- Realized daily
operating margins (revenue less operating costs per utilization
day) of US$14,692 in the U.S. and $13,558 in Canada. Sequentially,
our daily operating margins have increased in the U.S. and Canada
23% and 10%, respectively.
- Grew Alpha™ and
EverGreen™ revenue by over 60% compared with the first quarter of
2022.
- Ended the quarter
with 73 of our AC Super Triple rigs equipped with Alpha™,
representing a 46% increase over the same quarter last year.
- Continued to scale
our EverGreen™ product line, adding two EverGreen™ BESS, three
EverGreen™ Integrated Power and Emissions Monitoring Systems and 11
high mast LED lighting systems to our fleet.
- Reduce debt
by at least $150 million and allocate 10% to 20% 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.
- Returned $5 million
of capital to shareholders by repurchasing and cancelling 67,073
common shares.
- Cash provided by
operations during the quarter was $28 million, $131 million lower
than in the fourth quarter of 2022 due to the build-up of working
capital from seasonal cash demands of our business, annual
compensation payments and $39 million of cash interest
payments.
- Expect to generate
positive cash flow from operations in the second quarter and repay
the majority of the $78 million drawn on our Senior Credit Facility
in the first quarter.
- Remain committed to
reducing debt by at least $150 million in 2023, with the majority
of this expected to occur in the second half of the year.
OUTLOOK
Over the past few years, our customer base has
shifted priorities from growth to shareholder returns. Similarly,
the land drilling sector is demonstrating strict capital
discipline, where despite strong customer demand and high
utilization of Super Specification (Super-Spec)
rigs, drilling contractors are funding only the most attractive
capital investment opportunities and dismissing discussions of new
rig builds. These dynamics are producing a more sustainable and
predictable operating environment and ultimately generating better
investor returns.
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, OPEC holding steady on
production quotas, and years of underinvestment and capital
discipline by producers, which are limiting supply growth. We
therefore expect drilling activity to improve in oil basins in the
second half of the year as customers seek to generate appropriate
investment returns, maintain production levels and replenish
inventories. Natural gas is demonstrating 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 Canada, industry activity is supported by
imminent hydrocarbon export capacity increases with the Trans
Mountain oil pipeline and the Coastal GasLink pipeline, each
expected to begin operations within the next 12 months.
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.
On the oil side, we expect activity to remain strong as Canadian
producers are benefitting from a favorable U.S. exchange rate and a
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 Triple fleet to be fully utilized
with demand exceeding supply and our Super Single pad capable rigs
to be highly utilized. Accordingly, the tightening of available
Super-Spec rigs is expected to drive higher day rates, increase
demand for term contracts, and could necessitate customer-funded
rig upgrades or rig moves from the U.S.
In the U.S., drilling activity has been
increasing since mid-2020 but recently declined due to lower
natural gas prices. We expect demand to improve in the second half
of the year as customers continue to high-grade rigs to the latest
pad drilling, AlphaAutomationTM equipped rigs and modestly increase
rig counts in oily basins to maintain production.
Our AlphaTM technologies and EverGreenTM 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 nine EverGreen™ BESS deployed in the field and have
commitments for two additional deployments in the second quarter as
customer interest continues to rise for this low emission power
source. We recently expanded our partnership with CleanDesign, a
key supplier of EverGreenTM BESS, through a $5 million equity
investment commitment. This partnership will ensure we can meet the
expected demand for BESS and is aligned with our overall emissions
reduction strategy.
Internationally, we currently have five rigs
working on term contracts, two in Kuwait and three in the Kingdom
of Saudi Arabia, increasing to eight by the middle of the year
following successful contracting in 2022. We continue to bid our
remaining idle rigs within the region and remain optimistic in our
ability to secure rig reactivations.
The outlook for our Precision Well Servicing
business remains positive with strong customer demand supporting
maintenance and completion activity. We have successfully
integrated High Arctic’s well servicing assets and associated
rental business that we acquired in July 2022. By leveraging our
existing platform and continuing our strict focus on cost control,
we have realized annual run-rate cost synergies of approximately $4
million and expect to achieve our $5 million target in the second
quarter.
Commodity Prices
First quarter average West Texas Intermediate
and Western Canadian Select oil prices decreased 19% and 29%,
respectively, from 2022. Average Henry Hub and AECO natural gas
prices declined 39% and 32%, respectively from 2022.
|
|
For the three months endedMarch 31, |
|
|
Year endedDecember 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Average oil and natural gas prices |
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
|
|
|
|
|
|
|
|
|
|
|
West Texas Intermediate (per barrel) (US$) |
|
|
76.11 |
|
|
|
94.29 |
|
|
|
94.23 |
|
Western Canadian Select (per barrel) (US$) |
|
|
56.31 |
|
|
|
79.77 |
|
|
|
78.15 |
|
Natural
gas |
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
Henry Hub (per MMBtu) (US$) |
|
|
2.77 |
|
|
|
4.57 |
|
|
|
6.51 |
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
AECO (per MMBtu) (CDN$) |
|
|
3.25 |
|
|
|
4.77 |
|
|
|
5.43 |
|
Contracts
The following chart outlines the average number
of drilling rigs under term contract by quarter as at April 25,
2023. For those quarters ending after March 31, 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 April 25, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
27 |
|
|
|
29 |
|
|
|
31 |
|
|
|
35 |
|
|
|
40 |
|
|
|
37 |
|
|
|
26 |
|
|
|
18 |
|
Canada |
|
|
6 |
|
|
|
8 |
|
|
|
10 |
|
|
|
16 |
|
|
|
19 |
|
|
|
20 |
|
|
|
18 |
|
|
|
15 |
|
International |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
4 |
|
|
|
6 |
|
|
|
8 |
|
|
|
8 |
|
Total |
|
|
39 |
|
|
|
43 |
|
|
|
47 |
|
|
|
57 |
|
|
|
63 |
|
|
|
63 |
|
|
|
52 |
|
|
|
41 |
|
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 April 25,
2023.
|
|
Average for the year ended |
|
|
|
|
|
2022 |
|
|
2023 |
|
|
|
Average rigs under term contract as of April 25, 2023: |
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
31 |
|
|
|
30 |
|
|
|
Canada |
|
|
10 |
|
|
|
18 |
|
|
|
International |
|
|
6 |
|
|
|
7 |
|
|
|
Total |
|
|
47 |
|
|
|
55 |
|
|
|
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 thequarter ended2023 |
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
|
Mar. 31 |
|
Average Precision active rig count: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
51 |
|
|
|
55 |
|
|
|
57 |
|
|
|
60 |
|
|
|
60 |
|
Canada |
|
63 |
|
|
|
37 |
|
|
|
59 |
|
|
|
66 |
|
|
|
69 |
|
International |
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
5 |
|
Total |
|
120 |
|
|
|
98 |
|
|
|
122 |
|
|
|
132 |
|
|
|
134 |
|
According to industry sources, as at April 25,
2023, the U.S. active land drilling rig count has increased 8% from
the same point last year while the Canadian active land drilling
rig count has increased 4%. To date in 2023, approximately 79% of
the U.S. industry’s active rigs and 59% of the Canadian industry’s
active rigs were drilling for oil targets, compared with 80% for
the U.S. and 59% for Canada at the same time last year.
Capital Spending and Free Cash Flow
Allocation
We remain committed to disciplined cash flow
management, capital spending and returning capital to shareholders.
We reduced our 2023 capital spending budget from $235 million to
$195 million in response to lower expected capital upgrades and
maintenance capital. Capital spending by spend category includes
$146 million for sustaining, infrastructure and intangibles and $49
million for expansion and upgrades. We expect that the $195 million
will be split as follows: $183 million in the Contract Drilling
Services segment, $11 million in the Completion and Production
Services segment, and $1 million in the Corporate segment. At March
31, 2023, Precision had capital commitments of approximately $199
million with payments expected through 2026.
We remain committed to our debt reduction plans
and in 2023 expect to reduce debt by at least $150 million and
allocate 10% to 20% of free cash flow before debt repayments for
share repurchases. Our long-term debt reduction target from the
beginning of 2022 through to the end of 2025 is $500 million and
target Net Debt to Adjusted EBITDA leverage ratio of below 1.0
times, while continuing to allocate 10% to 20% of free cash flow
before debt principal payments to shareholders.
On April 11, 2023, S&P Global Ratings raised
our issuer credit rating on our Unsecured Senior Notes to ‘B+’ from
‘B’.
SEGMENTED FINANCIAL RESULTS
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
2023 |
|
|
2022 |
|
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
486,076 |
|
|
|
314,145 |
|
|
|
54.7 |
|
Completion and Production Services |
|
74,523 |
|
|
|
38,238 |
|
|
|
94.9 |
|
Inter-segment eliminations |
|
(1,992 |
) |
|
|
(1,044 |
) |
|
|
90.8 |
|
|
|
558,607 |
|
|
|
351,339 |
|
|
|
59.0 |
|
Adjusted EBITDA:(1) |
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
189,123 |
|
|
|
71,174 |
|
|
|
165.7 |
|
Completion and Production Services |
|
17,406 |
|
|
|
6,539 |
|
|
|
166.2 |
|
Corporate and Other |
|
(3,310 |
) |
|
|
(40,858 |
) |
|
|
(91.9 |
) |
|
|
203,219 |
|
|
|
36,855 |
|
|
|
451.4 |
|
(1) See “FINANCIAL
MEASURES AND RATIOS.”
SEGMENT REVIEW OF CONTRACT DRILLING
SERVICES
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars, except where noted) |
2023 |
|
|
2022 |
|
|
% Change |
|
Revenue |
|
486,076 |
|
|
|
314,145 |
|
|
|
54.7 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
287,067 |
|
|
|
230,051 |
|
|
|
24.8 |
|
General and administrative |
|
9,886 |
|
|
|
12,920 |
|
|
|
(23.5 |
) |
Adjusted EBITDA(1) |
|
189,123 |
|
|
|
71,174 |
|
|
|
165.7 |
|
Adjusted EBITDA as a percentage of revenue(1) |
|
38.9 |
% |
|
|
22.7 |
% |
|
|
|
|
(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 |
|
(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 |
|
(1) Canadian operations
only.(2) Baker Hughes rig counts.
SEGMENT REVIEW OF COMPLETION AND
PRODUCTION SERVICES
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars, except where noted) |
2023 |
|
|
2022 |
|
|
% Change |
|
Revenue |
|
74,523 |
|
|
|
38,238 |
|
|
|
94.9 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
54,792 |
|
|
|
29,967 |
|
|
|
82.8 |
|
General and administrative |
|
2,325 |
|
|
|
1,732 |
|
|
|
34.2 |
|
Adjusted EBITDA(1) |
|
17,406 |
|
|
|
6,539 |
|
|
|
166.2 |
|
Adjusted EBITDA as a percentage of revenue(1) |
|
23.4 |
% |
|
|
17.1 |
% |
|
|
|
|
Well servicing statistics: |
|
|
|
|
|
|
|
|
|
|
|
Number of service rigs (end of period) |
|
118 |
|
|
|
123 |
|
|
|
(4.1 |
) |
Service rig operating hours |
|
58,341 |
|
|
|
38,265 |
|
|
|
52.5 |
|
Service rig operating hour utilization |
|
55 |
% |
|
|
46 |
% |
|
|
|
|
(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 $3 million as compared with
$41 million in the first quarter of 2022. Our current quarter
Adjusted EBITDA was positively impacted by decreased share-based
compensation costs due to our lower share price.
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 amounts expensed under these plans
during the reporting periods are as follows:
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
2023 |
|
|
2022 |
|
Cash settled share-based incentive plans |
|
(12,095 |
) |
|
|
47,211 |
|
Equity settled share-based
incentive plans |
|
480 |
|
|
|
427 |
|
Total share-based incentive compensation plan expense
(recovery) |
|
(11,615 |
) |
|
|
47,638 |
|
|
|
|
|
|
|
|
|
Allocated: |
|
|
|
|
|
|
|
Operating |
|
(1,883 |
) |
|
|
10,920 |
|
General and Administrative |
|
(9,732 |
) |
|
|
36,718 |
|
|
|
(11,615 |
) |
|
|
47,638 |
|
Cash settled share-based compensation recovery
for the quarter was $12 million as compared with an expense of $47
million in 2022. Our 2023 recovery was primarily due to a 33%
decrease in our share price from the start of the year, whereas the
expense in 2022 reflected our share price increasing by
approximately 100% over the comparable period.
As at March 31, 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 $23 million as compared
with $21 million in 2022. Our increased finance charges were
primarily due to higher variable interest rates and the impact of
the weakening of the Canadian dollar on our U.S. dollar denominated
interest. Interest charges on our U.S. denominated long-term debt
were US$15 million ($21 million) as compared with US$15 million
($19 million) in 2022.
Income Tax
Income tax expense for the quarter was $18
million as compared with $1 million in 2022. During the first
quarter, we did not recognize deferred tax assets on certain
Canadian and international operating losses.
LIQUIDITY AND CAPITAL
RESOURCES
Liquidity
Amount |
|
Availability |
|
Used for |
|
Maturity |
Senior credit facility (secured) |
|
|
|
|
|
|
US$500 million(1) (extendible, revolvingterm credit facility with
US$300 million accordion feature) |
|
US$102 million drawn and US$56 million in outstanding letters of
credit |
|
General corporate purposes |
|
June 18, 2025(1) |
Real estate credit facilities (secured) |
|
|
|
|
|
|
US$9 million |
|
Fully drawn |
|
General corporate purposes |
|
November 19, 2025 |
$17 million |
|
Fully drawn |
|
General corporate purposes |
|
March 16, 2026 |
Operating facilities (secured) |
|
|
|
|
|
|
$40 million |
|
Undrawn, except $22 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$40 million |
|
Undrawn, except US$21 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 March 31, 2022, we had $1,178 million
outstanding under our Senior Credit Facility, Real Estate Credit
Facilities and unsecured senior notes as compared with $1,103
million at December 31, 2022. The current blended cash interest
cost of our debt is approximately 7.0%.
On April 11, 2023, S&P Global Ratings raised
our issuer credit rating on our Unsecured Senior Notes to ‘B+’ from
‘B’.
Covenants
At March 31, 2023, we were in compliance with
the covenants of our Senior Credit Facility and Real Estate Credit
Facilities.
|
Covenant |
|
At March 31, 2023 |
|
Senior Credit Facility |
|
|
|
|
|
Consolidated senior debt to consolidated covenant EBITDA(1) |
< 2.50 |
|
|
0.36 |
|
Consolidated covenant EBITDA to consolidated interest expense |
> 2.50 |
|
|
5.41 |
|
Real Estate Credit
Facilities |
|
|
|
|
|
Consolidated covenant EBITDA to consolidated interest expense |
> 2.50 |
|
|
5.41 |
|
(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 March 31, |
|
|
2023 |
|
|
2022 |
|
Net earnings (loss) - basic |
|
95,830 |
|
|
|
(43,844 |
) |
Effect
of share options and other equity compensation plans |
|
(13,244 |
) |
|
|
— |
|
Net earnings (loss) - diluted |
|
82,586 |
|
|
|
(43,844 |
) |
|
For the three months ended March 31, |
|
(Stated
in thousands) |
2023 |
|
|
2022 |
|
Weighted average shares outstanding – basic |
|
13,648 |
|
|
|
13,479 |
|
Effect
of share options and other equity compensation plans |
|
1,191 |
|
|
|
— |
|
Weighted average shares outstanding – diluted |
|
14,839 |
|
|
|
13,479 |
|
QUARTERLY FINANCIAL SUMMARY
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2022 |
|
|
2023 |
|
Quarters ended |
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
Revenue |
|
|
326,016 |
|
|
|
429,335 |
|
|
|
510,504 |
|
|
|
558,607 |
|
Adjusted EBITDA(1) |
|
|
64,099 |
|
|
|
119,561 |
|
|
|
91,090 |
|
|
|
203,219 |
|
Net earnings (loss) |
|
|
(24,611 |
) |
|
|
30,679 |
|
|
|
3,483 |
|
|
|
95,830 |
|
Net earnings (loss) per basic
share |
|
|
(1.81 |
) |
|
|
2.26 |
|
|
|
0.27 |
|
|
|
7.02 |
|
Net earnings (loss) per
diluted share |
|
|
(1.81 |
) |
|
|
2.03 |
|
|
|
0.27 |
|
|
|
5.57 |
|
Funds provided by
operations(1) |
|
|
60,373 |
|
|
|
81,327 |
|
|
|
111,339 |
|
|
|
159,653 |
|
Cash
provided by operations |
|
|
135,174 |
|
|
|
8,142 |
|
|
|
159,082 |
|
|
|
28,356 |
|
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2021 |
|
|
2022 |
|
Quarters ended |
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
Revenue |
|
|
201,359 |
|
|
|
253,813 |
|
|
|
295,202 |
|
|
|
351,339 |
|
Adjusted EBITDA(1) |
|
|
28,944 |
|
|
|
45,408 |
|
|
|
63,881 |
|
|
|
36,855 |
|
Net loss |
|
|
(75,912 |
) |
|
|
(38,032 |
) |
|
|
(27,336 |
) |
|
|
(43,844 |
) |
Net loss per basic share |
|
|
(5.71 |
) |
|
|
(2.86 |
) |
|
|
(2.05 |
) |
|
|
(3.25 |
) |
Net loss per diluted
share |
|
|
(5.71 |
) |
|
|
(2.86 |
) |
|
|
(2.05 |
) |
|
|
(3.25 |
) |
Funds provided by
operations(1) |
|
|
12,607 |
|
|
|
33,525 |
|
|
|
62,681 |
|
|
|
29,955 |
|
Cash
provided by (used in) operations |
|
|
42,219 |
|
|
|
21,871 |
|
|
|
59,713 |
|
|
|
(65,294 |
) |
(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, finance charges, foreign
exchange, gain on asset disposals and depreciation and
amortization), as reported in our Condensed Interim Consolidated
Statements of Net 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 March 31, |
|
(Stated
in thousands of Canadian dollars) |
2023 |
|
|
2022 |
|
Adjusted EBITDA by segment: |
|
|
|
|
|
|
|
Contract Drilling Services |
|
189,123 |
|
|
|
71,174 |
|
Completion and Production Services |
|
17,406 |
|
|
|
6,539 |
|
Corporate and Other |
|
(3,310 |
) |
|
|
(40,858 |
) |
Adjusted EBITDA |
|
203,219 |
|
|
|
36,855 |
|
Depreciation and
amortization |
|
71,543 |
|
|
|
68,457 |
|
Gain on asset disposals |
|
(9,276 |
) |
|
|
(3,114 |
) |
Foreign exchange |
|
(483 |
) |
|
|
(518 |
) |
Finance charges |
|
22,920 |
|
|
|
20,730 |
|
Loss (gain) on investments and
other assets |
|
4,230 |
|
|
|
(5,569 |
) |
Incomes
taxes |
|
18,455 |
|
|
|
713 |
|
Net earnings (loss) |
|
95,830 |
|
|
|
(43,844 |
) |
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 March 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2023 |
|
|
2022 |
|
Capital spending by spend category |
|
|
|
|
|
|
|
|
Expansion and upgrade |
|
|
16,345 |
|
|
|
9,615 |
|
Maintenance and infrastructure |
|
|
34,450 |
|
|
|
26,787 |
|
|
|
|
50,795 |
|
|
|
36,402 |
|
Proceeds on sale of property, plant and equipment |
|
|
(7,765 |
) |
|
|
(2,847 |
) |
Net capital spending |
|
|
43,030 |
|
|
|
33,555 |
|
Business acquisitions |
|
|
28,000 |
|
|
|
— |
|
Purchase of investments and
other assets |
|
|
55 |
|
|
|
— |
|
Changes
in non-cash working capital balances |
|
|
7,732 |
|
|
|
(3,212 |
) |
Cash used in investing activities |
|
|
78,817 |
|
|
|
30,343 |
|
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: |
|
At December 31, |
|
|
At December 31, |
|
(Stated
in thousands of Canadian dollars) |
2023 |
|
|
2022 |
|
Current assets |
|
515,439 |
|
|
|
470,670 |
|
Current
liabilities |
|
266,591 |
|
|
|
410,029 |
|
Working capital |
|
248,848 |
|
|
|
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 to 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 to 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 margins in 2023;
- the average number of term
contracts in place for 2023;
- customer adoption of AlphaTM
technologies and EverGreenTM suite of environmental solutions;
- anticipated 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) |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
41,619 |
|
|
$ |
21,587 |
|
Accounts receivable |
|
|
437,258 |
|
|
|
413,925 |
|
Inventory |
|
|
36,562 |
|
|
|
35,158 |
|
Total current assets |
|
|
515,439 |
|
|
|
470,670 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Income tax recoverable |
|
|
695 |
|
|
|
1,602 |
|
Deferred tax assets |
|
|
454 |
|
|
|
455 |
|
Right-of-use assets |
|
|
59,493 |
|
|
|
60,032 |
|
Property, plant and equipment |
|
|
2,280,492 |
|
|
|
2,303,338 |
|
Intangibles |
|
|
18,550 |
|
|
|
19,575 |
|
Investments and other assets |
|
|
16,276 |
|
|
|
20,451 |
|
Total non-current assets |
|
|
2,375,960 |
|
|
|
2,405,453 |
|
Total assets |
|
$ |
2,891,399 |
|
|
$ |
2,876,123 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
248,140 |
|
|
$ |
392,053 |
|
Income taxes payable |
|
|
3,379 |
|
|
|
2,991 |
|
Current portion of lease obligations |
|
|
12,787 |
|
|
|
12,698 |
|
Current portion of long-term debt |
|
|
2,285 |
|
|
|
2,287 |
|
Total current liabilities |
|
|
266,591 |
|
|
|
410,029 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
17,154 |
|
|
|
60,133 |
|
Provisions and other |
|
|
7,518 |
|
|
|
7,538 |
|
Lease obligations |
|
|
52,443 |
|
|
|
52,978 |
|
Long-term debt |
|
|
1,161,626 |
|
|
|
1,085,970 |
|
Deferred tax liabilities |
|
|
46,482 |
|
|
|
28,946 |
|
Total non-current liabilities |
|
|
1,285,223 |
|
|
|
1,235,565 |
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Shareholders’ capital |
|
|
2,313,746 |
|
|
|
2,299,533 |
|
Contributed surplus |
|
|
73,035 |
|
|
|
72,555 |
|
Deficit |
|
|
(1,205,443 |
) |
|
|
(1,301,273 |
) |
Accumulated other comprehensive income |
|
|
158,247 |
|
|
|
159,714 |
|
Total shareholders’ equity |
|
|
1,339,585 |
|
|
|
1,230,529 |
|
Total liabilities and shareholders’ equity |
|
$ |
2,891,399 |
|
|
$ |
2,876,123 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF NET EARNINGS (LOSS) (UNAUDITED)
|
|
Three Months Ended March 31, |
|
(Stated
in thousands of Canadian dollars, except per share amounts) |
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
558,607 |
|
|
$ |
351,339 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating |
|
|
339,867 |
|
|
|
258,974 |
|
General and administrative |
|
|
15,521 |
|
|
|
55,510 |
|
Earnings before income taxes, loss (gain) on investments and other
assets, finance charges, foreign exchange, gain on asset disposals
and depreciation and amortization |
|
|
203,219 |
|
|
|
36,855 |
|
Depreciation and
amortization |
|
|
71,543 |
|
|
|
68,457 |
|
Gain on asset disposals |
|
|
(9,276 |
) |
|
|
(3,114 |
) |
Foreign exchange |
|
|
(483 |
) |
|
|
(518 |
) |
Finance charges |
|
|
22,920 |
|
|
|
20,730 |
|
Loss
(gain) on investments and other assets |
|
|
4,230 |
|
|
|
(5,569 |
) |
Earnings (loss) before income taxes |
|
|
114,285 |
|
|
|
(43,131 |
) |
Income taxes: |
|
|
|
|
|
|
|
|
Current |
|
|
841 |
|
|
|
970 |
|
Deferred |
|
|
17,614 |
|
|
|
(257 |
) |
|
|
|
18,455 |
|
|
|
713 |
|
Net earnings (loss) |
|
$ |
95,830 |
|
|
$ |
(43,844 |
) |
Net earnings (loss) per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
7.02 |
|
|
$ |
(3.25 |
) |
Diluted |
|
$ |
5.57 |
|
|
$ |
(3.25 |
) |
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
|
|
Three Months Ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2023 |
|
|
2022 |
|
Net earnings (loss) |
|
$ |
95,830 |
|
|
$ |
(43,844 |
) |
Unrealized gain
(loss) on translation of assets and
liabilities of operations denominated in foreign
currency |
|
|
(4,140 |
) |
|
|
(16,971 |
) |
Foreign exchange gain
(loss) on net investment hedge
with U.S. denominated debt |
|
|
2,673 |
|
|
|
12,768 |
|
Comprehensive income (loss) |
|
$ |
94,363 |
|
|
$ |
(48,047 |
) |
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Three Months Ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2023 |
|
|
2022 |
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
95,830 |
|
|
$ |
(43,844 |
) |
Adjustments for: |
|
|
|
|
|
|
|
|
Long-term compensation plans |
|
|
(4,117 |
) |
|
|
31,212 |
|
Depreciation and amortization |
|
|
71,543 |
|
|
|
68,457 |
|
Gain on asset disposals |
|
|
(9,276 |
) |
|
|
(3,114 |
) |
Foreign exchange |
|
|
(502 |
) |
|
|
(271 |
) |
Finance charges |
|
|
22,920 |
|
|
|
20,730 |
|
Income taxes |
|
|
18,455 |
|
|
|
713 |
|
Loss (gain) on investments and other assets |
|
|
4,230 |
|
|
|
(5,569 |
) |
Income taxes paid |
|
|
(171 |
) |
|
|
(227 |
) |
Interest paid |
|
|
(39,375 |
) |
|
|
(38,161 |
) |
Interest received |
|
|
116 |
|
|
|
29 |
|
Funds provided by operations |
|
|
159,653 |
|
|
|
29,955 |
|
Changes
in non-cash working capital balances |
|
|
(131,297 |
) |
|
|
(95,249 |
) |
|
|
|
28,356 |
|
|
|
(65,294 |
) |
Investments: |
|
|
|
|
|
|
|
|
Purchase of property, plant
and equipment |
|
|
(50,795 |
) |
|
|
(36,402 |
) |
Proceeds on sale of property,
plant and equipment |
|
|
7,765 |
|
|
|
2,847 |
|
Business acquisitions |
|
|
(28,000 |
) |
|
|
— |
|
Purchase of investments and
other assets |
|
|
(55 |
) |
|
|
— |
|
Changes
in non-cash working capital balances |
|
|
(7,732 |
) |
|
|
3,212 |
|
|
|
|
(78,817 |
) |
|
|
(30,343 |
) |
Financing: |
|
|
|
|
|
|
|
|
Issuance of long-term
debt |
|
|
139,049 |
|
|
|
88,124 |
|
Repayments of long-term
debt |
|
|
(61,344 |
) |
|
|
(8,190 |
) |
Repurchase of share
capital |
|
|
(4,993 |
) |
|
|
— |
|
Issuance of common shares on
the exercise of options |
|
|
— |
|
|
|
1,396 |
|
Lease payments |
|
|
(1,961 |
) |
|
|
(1,567 |
) |
|
|
|
70,751 |
|
|
|
79,763 |
|
Effect of exchange rate changes on cash |
|
|
(258 |
) |
|
|
(612 |
) |
Increase (decrease) in cash |
|
|
20,032 |
|
|
|
(16,486 |
) |
Cash,
beginning of period |
|
|
21,587 |
|
|
|
40,588 |
|
Cash, end of period |
|
$ |
41,619 |
|
|
$ |
24,102 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome |
|
|
Deficit |
|
|
TotalEquity |
|
Balance at January 1, 2023 |
|
$ |
2,299,533 |
|
|
$ |
72,555 |
|
|
$ |
159,714 |
|
|
$ |
(1,301,273 |
) |
|
$ |
1,230,529 |
|
Net loss for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
95,830 |
|
|
|
95,830 |
|
Other comprehensive income for
the period |
|
|
— |
|
|
|
— |
|
|
|
(1,467 |
) |
|
|
— |
|
|
|
(1,467 |
) |
Settlement of Executive
Performance and Restricted Share Units |
|
|
19,206 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,206 |
|
Share repurchases |
|
|
(4,993 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,993 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
480 |
|
|
|
— |
|
|
|
— |
|
|
|
480 |
|
Balance at March 31, 2023 |
|
$ |
2,313,746 |
|
|
$ |
73,035 |
|
|
$ |
158,247 |
|
|
$ |
(1,205,443 |
) |
|
$ |
1,339,585 |
|
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome |
|
|
Deficit |
|
|
TotalEquity |
|
Balance at January 1, 2022 |
|
$ |
2,281,444 |
|
|
$ |
76,311 |
|
|
$ |
134,780 |
|
|
$ |
(1,266,980 |
) |
|
$ |
1,225,555 |
|
Net loss for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(43,844 |
) |
|
|
(43,844 |
) |
Other comprehensive loss for
the period |
|
|
— |
|
|
|
— |
|
|
|
(4,203 |
) |
|
|
— |
|
|
|
(4,203 |
) |
Share options exercised |
|
|
1,970 |
|
|
|
(574 |
) |
|
|
— |
|
|
|
— |
|
|
|
1,396 |
|
Settlement of Executive
Performance Share Units |
|
|
14,083 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,083 |
|
Share-based compensation
reclassification |
|
|
— |
|
|
|
(219 |
) |
|
|
— |
|
|
|
— |
|
|
|
(219 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
646 |
|
|
|
— |
|
|
|
— |
|
|
|
646 |
|
Balance at March 31, 2022 |
|
$ |
2,297,497 |
|
|
$ |
76,164 |
|
|
$ |
130,577 |
|
|
$ |
(1,310,824 |
) |
|
$ |
1,193,414 |
|
FOURTH QUARTER AND YEAR-END 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 Wednesday, April 26, 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/BI0f12c61ee4a84326802825fae40c640b
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/4jaytie7
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, CADirector, Investor
Relations403.716.4500
800, 525 - 8th Avenue S.W.Calgary, Alberta,
Canada T2P 1G1Website: www.precisiondrilling.com
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