Precision Drilling Corporation announces Kuwait contract award and activity update
July 09 2018 - 5:00AM
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.
Precision Drilling Corporation (“Precision”)
(TSX:PD) (NYSE:PDS) is pleased to announce the award of one new
build ST-3000 drilling rig in Kuwait under a five year take-or-pay
contract with an optional one year extension. Precision has five
active rigs in Kuwait on long term contract and expects the sixth
rig to commence operations in the third quarter of 2019. All six
rigs have standardized rig design features and specifications
delivered within the last five years. In line with prior new
builds, the rig has attractive internal return metrics and a
payback period within the initial contract term. The rig addition
allows us to leverage our existing scale in country with no
additional overhead required to support the expanded fleet. Capital
cost for the new build is approximately US$60 million with
approximately US$10 million expected to be spent in 2018 and the
remainder in 2019.
One of Precision’s three strategic priorities
for 2018 is to reduce debt by generating free cash flow while
continuing to fund only the most attractive investment
opportunities. We communicated a firm goal to reduce debt by $75 to
$125 million in 2018, and have successfully achieved the low end of
that range in the first half of this year. Capital expenditures for
the year are expected to be funded with free cash flow, with debt
repayment remaining a key priority. Our expected cash balance for
the end of the second quarter is approximately $95 million.
Precision currently has 54 active rigs in Canada
as we emerge from the lows of spring breakup. Despite a fairly flat
industry rig count, our activity levels are tracking ahead of last
year with visibility to exceed 60 active rigs by mid-August,
surpassing our peak rig count in the third quarter of last year. In
the U.S., demand for Precision’s rigs continues to strengthen with
78 rigs currently active and visibility to reach 80 rigs by the end
of July.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION AND STATEMENTS
Certain statements contained in this report,
including statements that contain words such as "could", "should",
"can", "anticipate", "estimate", "intend", "plan", "expect",
"believe", "will", "may", "continue", "project", "potential" and
similar expressions and statements relating to matters that are not
historical facts constitute "forward-looking information" within
the meaning of applicable Canadian securities legislation and
"forward-looking statements" within the meaning of the "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995 (collectively, "forward-looking
information and statements").
In particular, forward looking information and
statements include, but are not limited to, the following:
- anticipated future debt reduction;
- anticipated cash balance at the end of the second quarter;
- anticipated capital spending for 2018 and 2019;
- anticipated activity levels in 2018; and
- anticipated customer demand in 2018.
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 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 demand for contract drilling, well
servicing and ancillary oilfield services;
- our customers’ inability to obtain adequate credit or financing
to support their drilling and production activity;
- changes in drilling and well servicing technology which could
reduce demand for certain rigs or put us at a competitive
disadvantage;
- shortages, delays and interruptions in the delivery of
equipment supplies and other key inputs;
- the effects of seasonal and weather conditions on operations
and facilities;
- the availability of qualified personnel and management;
- a decline in our safety performance which could result in lower
demand for our services;
- changes in environmental laws and regulations such as increased
regulation of hydraulic fracturing or restrictions on the burning
of fossil fuels and greenhouse gas emissions, which could have an
adverse impact on the demand for oil and gas;
- terrorism, social, civil and political unrest in the foreign
jurisdictions where we operate;
- fluctuations in foreign exchange, interest rates and tax rates;
and
- other unforeseen conditions which could impact the use of
services supplied by Precision and Precision’s ability to respond
to such conditions.
Readers are cautioned that the forgoing list of
risk factors is not exhaustive. Additional information on these and
other factors that could affect our business, operations or
financial results are included in reports on file with applicable
securities regulatory authorities, including but not limited to
Precision’s Annual Information Form for the year ended December 31,
2017, which may be accessed on Precision’s SEDAR profile at
www.sedar.com or under Precision’s EDGAR profile at www.sec.gov.
The forward-looking information and statements contained in this
news release are made as of the date hereof and Precision
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, except as required by
law.
About Precision
Precision is a leading provider of safe and High
Performance, High Value services to the oil and gas industry.
Precision provides customers with access to an extensive fleet of
contract drilling rigs, directional drilling services, well service
and snubbing rigs, camps, rental equipment, and wastewater
treatment units backed by a comprehensive mix of technical support
services and skilled, experienced personnel.
Precision is headquartered in Calgary, Alberta,
Canada. Precision 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, CFASenior Vice President and Chief
Financial Officer713.435.6111 Ashley Connolly, CFAManager, Investor
Relations403.716.4725 Precision Drilling Corporation800, 525 - 8th
Avenue S.W.Calgary, Alberta, Canada T2P 1G1Website:
www.precisiondrilling.com
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