CALGARY, Alberta, Oct. 29, 2024 (GLOBE NEWSWIRE) -- This news release contains "forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending, Working Capital and Total Long-term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies. See "Financial Measures and Ratios” later in this news release.
Precision Drilling Corporation ("Precision" or the "Company") (TSX:PD; NYSE:PDS) delivered strong third quarter financial results, demonstrating the resilience of the business and its robust cash flow potential. Year to date, Precision has already achieved the low end of its debt reduction target range and is well on track to allocate 25% to 35% of its free cash flow to share buybacks in 2024.
Financial Highlights
- Revenue was $477 million and exceeded the $447 million realized in the third quarter of 2023 as activity increased in Canada and internationally, which more than offset lower activity in the U.S.
- Adjusted EBITDA(1) was $142 million, including a share-based compensation recovery of $0.2 million. In 2023, third quarter Adjusted EBITDA was $115 million and included share-based compensation charges of $31 million.
- Net earnings was $39 million or $2.77 per share, nearly doubling the $20 million or $1.45 per share in 2023.
- Completion and Production Services revenue increased 27% over the same period last year to $73 million, while Adjusted EBITDA rose 40% to $20 million, reflecting the successful integration of the CWC Energy Services (CWC) acquisition in late 2023.
- Internationally, revenue increased 21% over the third quarter of last year as the Company realized US$35 million of contract drilling revenue versus US$29 million in 2023. Revenue for the third quarter of 2024 was negatively impacted by fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
- Debt reduction during the quarter was $49 million and total $152 million year to date. Share repurchases during the quarter were $17 million and total $50 million year to date.
- Increased our 2024 planned capital expenditures from $195 million to $210 million to fund multiple contracted rig upgrades and the strategic purchase of drill pipe for use in 2025.
- Canada's activity increased 25%, averaging 72 active drilling rigs versus 57 in the third quarter of 2023. Our Super Triple and Super Single rigs are in high demand and approaching full utilization.
- Canadian revenue per utilization day was $32,325 and comparable to the $32,224 in the same period last year.
- U.S. activity averaged 35 drilling rigs compared to 41 for the third quarter of 2023.
- U.S. revenue per utilization day was US$32,949 versus US$35,135 in the same quarter last year.
- International activity increased 33% compared to the third quarter of 2023, with eight drilling rigs fully contracted this year following rig reactivations in 2023. International revenue per utilization day was US$47,223 compared to US$51,570 in the third quarter of 2023 due to fewer rig moves and planned rig recertifications completed in 2024.
- Service rig operating hours increased 34% over the same quarter last year totaling 62,835 hours driven by the CWC acquisition.
- Formed a strategic Joint Partnership (Partnership) with Indigenous partners to provide well servicing operations in northeast British Columbia.
MANAGEMENT COMMENTARY
"Precision's international and Canadian businesses led our third quarter results, with revenue, Adjusted EBITDA, and net income all improving over the same period last year, demonstrating the resilience of our High Performance, High Value strategy and geographic exposure. Our cash flow conversion this quarter enabled us to repay debt, buy back shares, and continue to invest in our Super Series fleet. We have already achieved the low end of our debt repayment target range for this year and expect to be less than a year away from meeting our long-term target of a Net Debt to Adjusted EBITDA ratio(1) of less than one time.
"Canadian fundamentals for heavy oil, condensate, and LNG remain strong due to the additional takeaway capacity. The Trans Mountain oil pipeline expansion is driving higher and stable returns for producers, who are accelerating heavy oil and condensate targeted drilling plans, while Canada's first LNG project is expected to stabilize natural gas pricing and further stimulate activity in the Montney in 2025. As the leading provider of high-quality and reliable services in Canada, demand for our Super Series fleet remains high. Today, we have 75 rigs operating, with our Super Triple and Super Single rigs nearly fully utilized. We expect strong customer demand and utilization to continue well beyond 2025.
"In the U.S., our rig count has been range-bound for the last several months, with 35 rigs operating today. Volatile commodity prices, customer consolidation, and budget exhaustion are all headwinds that we expect will continue to suppress activity for the remainder of the year. We are encouraged by recent momentum in our contract book with seven new contracts secured for oil and natural gas drilling projects that are expected to begin late this year for 2025 drilling programs. Looking ahead, we anticipate that the next wave of additional Gulf Coast LNG export facilities, coal plant retirements, and a build-out of AI data centers should drive further natural gas drilling and support sustained natural gas demand.
"Precision's international operations provide a stable foundation for earnings and cash flow as our rigs are under long-term contracts that extend into 2028. Our well servicing business further complements our stability as we remain the premier well service provider in Canada where demand continues to outpace manned service rigs. In 2023, we repositioned these businesses with rig reactivations and our CWC acquisition and as a result, each business is on track to increase its 2024 Adjusted EBITDA by approximately 50% over the prior year.
"I am proud of the discipline Precision continues to show throughout the organization and we remain focused on our strategic priorities, which include generating free cash flow, improving capital returns to shareholders, and delivering operational excellence. With robust Canadian market fundamentals, an improving long-term outlook for the U.S., and a focused strategy, I am confident we will continue to drive higher total shareholder returns. I would like to thank our team for executing at the highest operating levels and generating strong financial performance and value for our customers,” stated Kevin Neveu, Precision's President and CEO.
(1) See "FINANCIAL MEASURES AND RATIOS."
SELECT FINANCIAL AND OPERATING INFORMATION
Financial Highlights
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| (Stated in thousands of Canadian dollars, except per share amounts) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||
| Revenue | 477,155 | 446,754 | 6.8 | 1,434,157 | 1,430,983 | 0.2 | |||||||||||||||||
| Adjusted EBITDA(1) | 142,425 | 114,575 | 24.3 | 400,695 | 459,887 | (12.9 | ) | ||||||||||||||||
| Net earnings | 39,183 | 19,792 | 98.0 | 96,400 | 142,522 | (32.4 | ) | ||||||||||||||||
| Cash provided by operations | 79,674 | 88,500 | (10.0 | ) | 319,292 | 330,316 | (3.3 | ) | |||||||||||||||
| Funds provided by operations(1) | 113,322 | 91,608 | 23.7 | 342,837 | 388,220 | (11.7 | ) | ||||||||||||||||
| Cash used in investing activities | 38,852 | 34,278 | 13.3 | 141,032 | 157,157 | (10.3 | ) | ||||||||||||||||
| Capital spending by spend category(1) | |||||||||||||||||||||||
| Expansion and upgrade | 7,709 | 13,479 | (42.8 | ) | 30,501 | 39,439 | (22.7 | ) | |||||||||||||||
| Maintenance and infrastructure | 56,139 | 38,914 | 44.3 | 127,297 | 108,463 | 17.4 | |||||||||||||||||
| Proceeds on sale | (5,647 | ) | (6,698 | ) | (15.7 | ) | (21,825 | ) | (20,724 | ) | 5.3 | ||||||||||||
| Net capital spending(1) | 58,201 | 45,695 | 27.4 | 135,973 | 127,178 | 6.9 | |||||||||||||||||
| Net earnings per share: | |||||||||||||||||||||||
| Basic | 2.77 | 1.45 | 91.0 | 6.74 | 10.45 | (35.5 | ) | ||||||||||||||||
| Diluted | 2.31 | 1.45 | 59.3 | 6.73 | 9.84 | (31.6 | ) | ||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 14,142 | 13,607 | 3.9 | 14,312 | 13,643 | 4.9 | |||||||||||||||||
| Diluted | 14,890 | 13,610 | 9.4 | 14,317 | 14,858 | (3.6 | ) | ||||||||||||||||
Operating Highlights