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, 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 2022 first quarter
financial results:
- Revenue of $351
million, an increase of 49% compared with the first quarter of
2021, supported by U.S. and Canadian drilling activity growth of
56% and 48%, respectively.
- Day rates increased
in the U.S. and Canada by 10% and 15%, respectively, as compared
with the first quarter of 2021.
- Strengthened our
contract book with year-to-date additions of 27 term
contracts.
- Awarded five-year
contract extensions for all three active rigs in the Kingdom of
Saudi Arabia.
- Achieved a record
number of total paid AlphaAutomation™, AlphaApps™ and
AlphaAnalytics™ days during the quarter, eclipsing the
previous mark by more than 7%.
- Deployed our second
EverGreen™ Battery Energy Storage System with four additional
deployments scheduled in 2022.
- Adjusted EBITDA
(see “FINANCIAL MEASURES AND RATIOS”) of $37 million which included
share-based compensation charges of $48 million resulting primarily
from our 107% increase in share price from the end of 2021.
- Net loss of $44
million or $3.25 per share compared with a net loss of $36 million
or $2.70 per share in 2021.
- Cash used in
operations of $65 million and generated $30 million of funds from
operations (see “FINANCIAL MEASURES AND RATIOS”).
- Ended the quarter
with more than $430 million of available liquidity.
- Increased our
capital spending plan to $125 million in response to higher demand
and customer contracted rig upgrades.
Precision’s President and CEO Kevin Neveu
stated:
“Precision’s first quarter revenue of $351
million exceeded expectations, increasing 49% year-over-year and
19% sequentially from the fourth quarter of 2021. Customer demand
for our services in both the U.S. and Canada continues to grow with
U.S. activity up 10% sequentially and Canadian winter activity
matching 2018 levels. All indications point to the current market
momentum continuing through 2022, driven by strong energy
supply-demand fundamentals that have taken shape in the early
post-pandemic recovery. As a result of our improving outlook, we
are increasing our 2022 capital spending plan to $125 million in
anticipation of higher activity and additional contracted rig
upgrades.”
“Precision’s first quarter Adjusted EBITDA of
$37 million (includes $48 million of share-based compensation
expense) compares to fourth quarter 2021 Adjusted EBITDA of $64
million (includes $6 million of share-based compensation expense)
and the sequential results demonstrate improving field-level
profitability. Pricing increases over the past several quarters
have largely offset impacts of labor and supply chain inflation and
we foresee additional pricing increases throughout the year
combined with the continuation of cost savings measures implemented
in 2020 resulting in a further expansion of margins. The Precision
team remains fully committed to delivering on our 2022 strategic
priorities, which include scaling our Alpha™ and
EverGreen™ technologies, leveraging our scale to grow free
cash flow and improving our balance sheet and shareholder
returns.”
“Currently, we have 55 active rigs running in
the U.S., an increase of 12% from the start of the year and 38%
from a year ago. We expect activity to continue trending upwards
throughout the year. Leading-edge day rates experienced a step
change during the first quarter, now firmly over $30,000 per day as
the tight supply of high-spec rigs has become apparent to all
industry participants. Responding to this improved market, we have
signed 19 term contracts since early February.”
“In Canada, we peaked at 72 active rigs during
the first quarter and recorded a 48% increase in average activity
over Q1 2021. Currently, we are running 33 rigs compared to 20 rigs
this time last year, continuing the first quarter momentum, and we
expect third quarter activity to exceed first quarter activity as
our customers take advantage of strong commodity fundamentals.”
“Internationally, we have been notified of
five-year contract extensions for all three of our rigs in the
Kingdom of Saudi Arabia and are participating in an upcoming tender
in Kuwait, where we are bidding three of our idle AC Super Triple
rigs currently in country. We see activity increasing in the region
and are actively marketing our four remaining idle rigs to address
regional opportunities.”
“We have installed three
AlphaAutomation™ systems year-to-date, bringing our total to
50 Alpha™ rigs, or approximately 50% of our North American
Super Triple fleet and see a clear path to all our Super Triple
rigs converted to Alpha™ within the next two years. Our
Alpha™ technology offering provides excellent customer value
by reducing total well cost and mitigating operational risk
resulting in customer retention of nearly 100%. We continue to
develop our portfolio of EverGreen™ suite of environmental
solutions, offering customers multiple combinations of
emission-reduction solutions, such as our recently deployed Battery
Energy Storage System and Emissions Monitoring System. Both
Alpha™ and EverGreen™ are driving revenue growth and
establishing a sustainable competitive advantage for
Precision.”
“In the second quarter we will be mobilizing an
EverGreen™ grid-powered Super Triple rig to drill an
exploratory geothermal well on Cornell University’s Ithaca campus
as part of Cornell’s Earth Source Heat project. Utilizing direct
grid power will significantly decrease rig emissions and mitigate
noise in an environmentally sensitive area, key requirements for
the project. Precision is thrilled to be selected as the drilling
contractor for this important geothermal project and we commend
Cornell University for their goal of carbon neutrality.”
“Our capital allocation framework remains in
place, paying down $400 million of debt by 2025 and allocating 10%
to 20% of free cash flow before principal payments directly to
shareholders and reaching a Net Debt to Adjusted EBITDA level of
below 1.5 times. During the first quarter we utilized cash flow
from the business to invest in our fleet, furthering
Alpha™ and EverGreen™ expansion, upgrading rigs with term
contracts at attractive returns and securing long-lead items to
mitigate supply chain disruption. We expect to release cash from
working capital as the Canadian winter drilling season unwinds and
use additional operating cash flows toward our capital allocation
plan for the remainder of the year.”
“The Precision team has capitalized on the
opportunity to meet higher demand for our services and addressed
several growth-related operational challenges in the current
dynamic marketplace. Our business is highly labor intensive, and we
have met the need for people by recruiting and training quality
individuals to join our highly-skilled crews who safely operate our
Super Series rig fleet. Finally, we have actively managed our
supply chain through bulk purchase orders and longer-term pricing
and supply arrangements, mitigating many market-based supply chain
issues. At present, we believe we are fully capable of satisfying
the labor and equipment needs necessary to address growing customer
demand throughout 2022. I would like to thank all the people of
Precision on superb work meeting these challenges,” 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) |
2022 |
|
|
2021 |
|
|
% Change |
|
Revenue |
|
351,339 |
|
|
|
236,473 |
|
|
|
48.6 |
|
Adjusted EBITDA(1) |
|
36,855 |
|
|
|
54,539 |
|
|
|
(32.4 |
) |
Net loss |
|
(43,844 |
) |
|
|
(36,106 |
) |
|
|
21.4 |
|
Cash provided by (used in)
operations |
|
(65,294 |
) |
|
|
15,422 |
|
|
|
(523.4 |
) |
Funds provided by
operations(1) |
|
29,955 |
|
|
|
43,430 |
|
|
|
(31.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing
activities |
|
30,343 |
|
|
|
9,914 |
|
|
|
206.1 |
|
Capital spending by spend
category(1) |
|
|
|
|
|
|
|
|
|
|
|
Expansion and upgrade |
|
9,615 |
|
|
|
3,437 |
|
|
|
179.7 |
|
Maintenance and infrastructure |
|
26,787 |
|
|
|
4,999 |
|
|
|
435.8 |
|
Proceeds on sale |
|
(2,847 |
) |
|
|
(3,324 |
) |
|
|
(14.4 |
) |
Net capital spending(1) |
|
33,555 |
|
|
|
5,112 |
|
|
|
556.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
(3.25 |
) |
|
|
(2.70 |
) |
|
|
20.5 |
|
Diluted |
|
(3.25 |
) |
|
|
(2.70 |
) |
|
|
20.5 |
|
(1) See “FINANCIAL
MEASURES AND RATIOS.”
Operating Highlights
|
For the three months ended March 31, |
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
Contract drilling rig fleet |
|
227 |
|
|
|
227 |
|
|
|
- |
|
Drilling rig utilization
days: |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
4,590 |
|
|
|
2,951 |
|
|
|
55.5 |
|
Canada |
|
5,653 |
|
|
|
3,818 |
|
|
|
48.1 |
|
International |
|
540 |
|
|
|
540 |
|
|
|
- |
|
Revenue per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
U.S. (US$) |
|
24,299 |
|
|
|
22,133 |
|
|
|
9.8 |
|
Canada (Cdn$) |
|
24,263 |
|
|
|
21,131 |
|
|
|
14.8 |
|
International (US$) |
|
50,235 |
|
|
|
52,744 |
|
|
|
(4.8 |
) |
Operating cost per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
U.S. (US$) |
|
18,370 |
|
|
|
15,106 |
|
|
|
21.6 |
|
Canada (Cdn$) |
|
15,398 |
|
|
|
13,025 |
|
|
|
18.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service rig fleet |
|
123 |
|
|
|
123 |
|
|
|
- |
|
Service
rig operating hours |
|
38,265 |
|
|
|
34,903 |
|
|
|
9.6 |
|
Financial Position
(Stated in thousands of Canadian dollars, except ratios) |
March 31, 2022 |
|
|
December 31, 2021 |
|
Working capital(1) |
|
162,748 |
|
|
|
81,637 |
|
Cash |
|
24,102 |
|
|
|
40,588 |
|
Long-term debt |
|
1,174,462 |
|
|
|
1,106,794 |
|
Total long-term financial
liabilities |
|
1,257,447 |
|
|
|
1,185,858 |
|
Total assets |
|
2,692,884 |
|
|
|
2,661,752 |
|
Long-term debt to long-term debt plus equity ratio (1) |
|
0.50 |
|
|
|
0.47 |
|
(1) See “FINANCIAL
MEASURES AND RATIOS.”
Summary for the three months ended March 31,
2022:
- Revenue for the
first quarter was $351 million, 49% higher than in 2021 and was the
result of increased North American drilling and service activity
and day rates. Drilling rig utilization days increased by 56% in
the U.S. and 48% in Canada and well service activity increased 10%
as compared with the first quarter of 2021.
- Adjusted EBITDA for
the quarter was $37 million, $18 million lower than 2021 mainly due
to higher share-based compensation charges. Share-based
compensation charges for the quarter were $48 million, $37 million
higher than in 2021. The increase was primarily due to our higher
share price which rose by 107% from the end of 2021. Please refer
to “Other Items” later in this news release for additional
information on our share-based compensation charges.
- General and
administrative expenses this quarter were $56 million, $34 million
higher than in 2021 due to higher share-based compensation charges
and lower CEWS program assistance.
- Net finance charges
for the quarter were $21 million, $2 million lower than in 2021,
primarily due to reduced interest expense from lower debt levels
and average cost of borrowings.
- In the U.S.,
revenue per utilization day for the quarter increased to US$24,299
compared with US$22,133 in 2021. The increase was primarily the
result of higher day rates, Alpha™ activity and turnkey
activity. During the first quarter, we recognized revenue from
turnkey projects of US$12 million compared with US$5 million in
2021. On a sequential basis, revenue per utilization day, excluding
revenue from turnkey drilling increased approximately US$1,200
primarily due to higher day rates and Alpha™ activity. Our
first quarter operating costs on a per day basis increased to
US$18,370, compared with US$15,106 in 2021 due to higher rig
operating expenses, repairs and maintenance and turnkey activity,
partially offset by the impact of fixed costs being spread over
higher activity. Our higher rig operating expenses in 2022 were
primarily attributable to higher field wages and larger crew sizes.
During the second and fourth quarters of 2021, we implemented field
wage increases. In anticipation of increased activity in 2022, we
strategically staffed active rigs with larger crews to ensure we
have a sufficient number of crew personnel that are trained and
available to meet customer demand. Sequentially, excluding the
impact of turnkey activity, our operating costs per day increased
approximately US$1,180 due primarily to the strategic use of larger
crew sizes.
- In Canada, average
revenue per utilization day for contract drilling for the quarter
was $24,263 compared with $21,131 in 2021. Average operating costs
per utilization day for the quarter increased to $15,398 compared
with $13,025 in 2021. The increase was mainly due to industry-wide
wage increases that were enacted in the latter half of 2021 and
lower CEWS program assistance.
- During the quarter,
we did not recognize any CEWS program assistance as compared with
$9 million in 2021. In 2021, CEWS program assistance was presented
as offsets to operating and general and administrative costs of $8
million and $1 million, respectively.
- We realized first
quarter revenue from international contract drilling of US$27
million as compared with US$28 million in 2021. The lower revenue
in 2022 was primarily due to lower day rates as average revenue per
utilization day for the quarter was US$50,235, 5% lower than 2021
due to the expiration of drilling contracts.
- For the first
quarter, cash used in operations was $65 million compared with cash
provided by operations of $15 million in 2021. We generated $30
million of funds from operations during the quarter as compared
with $43 million in 2021. Our increased activity, higher
share-based compensation and debt interest payments contributed to
lower cash generation for the current quarter.
- Capital
expenditures were $36 million as compared with $8 million in 2021.
Capital spending by spend category (see “FINANCIAL MEASURES AND
RATIOS”) included $10 million for expansion and upgrades and $27
million for the maintenance of existing assets and
infrastructure.
- During the first
quarter of 2022, we borrowed $80 million on our Senior Credit
Facility to meet the seasonal cash demands of our business.
- We settled a
portion our Executive Performance Share Units
(PSU) through the issuance of 263,900 common
shares and issued an additional 21,370 common shares from the
exercise of share options.
STRATEGY
Precision’s strategic priorities for 2022 are as
follows:
- Grow
revenue through scaling Alpha™ technologies
and EverGreen™ suite of environmental
solutions across Precision's Super Series
rig fleet and further competitive differentiation through
ESG initiatives – We exited the quarter with 50 AC Super
Triple Alpha™ rigs equipped with our
AlphaAutomation™ platform and 16 commercialized AlphaApps™. As
compared with 2021, our first quarter paid days for
AlphaAutomation™, AlphaApps™ and
AlphaAnalytics™ increased 76%, 210% and 83%, respectively,
from further uptake of customers fully utilizing our suite of
Alpha™ technologies. During the quarter, we deployed our
second EverGreen™ Battery Energy Storage System
(BESS) with three additional contracted
deployments scheduled for the second quarter and one in the third
quarter. Customer interest in BESS continues to grow and we
anticipate additional deployments this year continuing into 2023.
We currently have seven active Integrated Power & Emissions
Monitoring Systems with three additional systems expected to be
deployed later this year. Our monitoring system provides a
real-time wellsite Greenhouse Gas (GHG) footprint
and insights into the correlation between power demand, fuel
consumption and resulting GHG emissions throughout the well
construction process. During the quarter, we installed LED lighting
at our Nisku Drilling Support Centre (DSC). The
project was completed with partial funding coming from the
Emissions Reduction Alberta’s ‘Energy Savings for Business’ program
and is expected to reduce our Scope 2 emissions at the Nisku DSC by
20%.
- Grow free
cash flow by maximizing operating leverage as demand for
our High Performance, High Value
services continues to rebound – In the U.S., we
had a first quarter average active rig count of 51, 56% higher than
in 2021. In Canada, our first quarter activity peaked at 72 active
rigs and averaged 63 active rigs for the quarter, a 48% increase
from 2021. Despite industry-wide inflationary pressures, our first
quarter daily operating margins (average revenue less operating
costs per utilization day) in our North American contract drilling
business improved as compared with the fourth quarter of 2021. Our
first quarter daily operating margin in the U.S. was $5,929,
slightly up from the fourth quarter of 2021 while our Canadian
daily operating margin increased 11% to $8,865. Our daily operating
margins were secured by our strengthening day rates and disciplined
supply chain management. With the tightening of available Super
Series rigs, pricing increases are expected to continue in the U.S.
and Canada.
- Utilize
free cash flow to continue strengthening our balance sheet while
investing in our people, equipment and returning capital to
shareholders – In the first quarter of 2022, cash used in
operations was $65 million due primarily to the build-up of working
capital from the seasonal cash demands of our business, annual
share-based compensation payments and $38 million of interest
payments. Our reinvestment into our drilling fleet included $36
million of capital expenditures and we generated $3 million of cash
proceeds from the divestiture of non-core assets. During the
quarter, we drew $80 million on our Senior Credit Facility to help
fund the cash requirements of our business. We expect to repay the
majority of our first quarter borrowings by the end of the second
quarter and progress further debt reduction by the end of the year
with a $75 million debt reduction target and a longer-term goal of
Net Debt to Adjusted EBITDA less than 1.5 times. We ended the
quarter with a cash balance of $24 million, US$182 million drawn on
our US$500 million Senior Credit Facility and over $430 million of
available liquidity.
OUTLOOK
The return of global energy demand against the
backdrop of a multi-year period of upstream oil and natural gas
underinvestment and imposed sanctions on Russian oil exports have
resulted in higher commodity prices, providing a promising outlook
for the oilfield services industry. At current commodity price
levels, we anticipate higher demand for our services and improved
fleet utilization as customers seek to maintain production levels
and replenish inventories, as drilled but uncompleted wells have
been depleted over the past several years.
With the expected rise in North American
industry activity in 2022, we anticipate further tightness in the
high specification rig market with customers seeking term contracts
to secure rigs and ensure fulfilment of their development programs.
Accordingly, the tightening of available high specification rigs is
expected to drive higher day rates and necessitate customer funded
rig upgrades.
Interest in our EverGreen™ suite of
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™ technologies paired with our
EverGreen™ suite of environmental solutions to be key
competitive differentiators as our predictable and repeatable
drilling results deliver exceptional value to our customers by
reducing risks, well construction costs and carbon footprint.
The Government of Canada’s $1.7 billion well
site abandonment and rehabilitation program continues to bolster
industry activity levels. During the first quarter of 2022, our
abandonment activity remained strong, and we expect this to
continue through to the end of the program in 2022.
Contracts
Year-to-date in 2022, we have entered into 27
term contracts. The following chart outlines the average number of
drilling rigs under contract by quarter as of April 27, 2022. For
those quarters ending after March 31, 2022, 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 April 27, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
21 |
|
|
|
24 |
|
|
|
22 |
|
|
|
24 |
|
|
|
27 |
|
|
|
28 |
|
|
|
26 |
|
|
|
21 |
|
Canada |
|
|
6 |
|
|
|
6 |
|
|
|
7 |
|
|
|
7 |
|
|
|
6 |
|
|
|
7 |
|
|
|
8 |
|
|
|
7 |
|
International |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
5 |
|
Total |
|
|
33 |
|
|
|
36 |
|
|
|
35 |
|
|
|
37 |
|
|
|
39 |
|
|
|
41 |
|
|
|
40 |
|
|
|
33 |
|
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 April 27,
2022.
|
|
Average for the year ended |
|
|
|
2021 |
|
|
2022 |
|
Average rigs under term contract as of April 27, 2022: |
|
|
|
|
|
|
|
|
U.S. |
|
|
23 |
|
|
|
26 |
|
Canada |
|
|
7 |
|
|
|
7 |
|
International |
|
|
6 |
|
|
|
6 |
|
Total |
|
|
36 |
|
|
|
39 |
|
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 2021 |
|
Average for thequarter ended 2022 |
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
|
Mar. 31 |
|
Average Precision active rig count: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
33 |
|
|
|
39 |
|
|
|
41 |
|
|
|
45 |
|
|
|
51 |
|
Canada |
|
42 |
|
|
|
27 |
|
|
|
51 |
|
|
|
52 |
|
|
|
63 |
|
International |
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
Total |
|
81 |
|
|
|
72 |
|
|
|
98 |
|
|
|
103 |
|
|
|
120 |
|
According to industry sources, as of April 27,
2022, the U.S. active land drilling rig count has increased 60%
from the same point last year while the Canadian active land
drilling rig count has increased by 84%. To date in 2022,
approximately 80% of the U.S. industry’s active rigs and 59% of the
Canadian industry’s active rigs were drilling for oil targets,
compared with 76% for the U.S. and 52% for Canada at the same time
last year.
Capital Spending and Free Cash Flow
Allocation
During the quarter, we increased our capital
spending plan to reflect higher maintenance capital from our
increasing activity, strategic purchase of drill pipe and customer
funded rig upgrades. Capital spending in 2022 is expected to be
$125 million and by spend category includes $72 million for
sustaining, infrastructure and intangibles and $53 million for
expansion and upgrades. We expect that the $125 million will be
split $113 million in the Contract Drilling Services segment, $11
million in the Completion and Production Services segment and $1
million to the Corporate segment. At March 31, 2022, Precision had
capital commitments of $135 million with payments expected through
2024.
Our debt reduction plans continue with the goal
of repaying over $400 million of debt over the next four years and
reaching a sustained Net Debt to Adjusted EBITDA ratio (See
“FINANCIAL MEASURES AND RATIOS”) 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 our debt reduction target 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, 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 March 31, |
|
(Stated
in thousands of Canadian dollars) |
2022 |
|
|
2021 |
|
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
314,145 |
|
|
|
204,819 |
|
|
|
53.4 |
|
Completion and Production Services |
|
38,238 |
|
|
|
32,544 |
|
|
|
17.5 |
|
Inter-segment eliminations |
|
(1,044 |
) |
|
|
(890 |
) |
|
|
17.3 |
|
|
|
351,339 |
|
|
|
236,473 |
|
|
|
48.6 |
|
Adjusted EBITDA:(1) |
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
71,174 |
|
|
|
60,031 |
|
|
|
18.6 |
|
Completion and Production Services |
|
6,539 |
|
|
|
7,802 |
|
|
|
(16.2 |
) |
Corporate and Other |
|
(40,858 |
) |
|
|
(13,294 |
) |
|
|
207.3 |
|
|
|
36,855 |
|
|
|
54,539 |
|
|
|
(32.4 |
) |
(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) |
2022 |
|
|
2021 |
|
|
% Change |
|
Revenue |
|
314,145 |
|
|
|
204,819 |
|
|
|
53.4 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
230,051 |
|
|
|
138,121 |
|
|
|
66.6 |
|
General and administrative |
|
12,920 |
|
|
|
6,667 |
|
|
|
93.8 |
|
Adjusted EBITDA(1) |
|
71,174 |
|
|
|
60,031 |
|
|
|
18.6 |
|
Adjusted EBITDA as a percentage of revenue(1) |
|
22.7 |
% |
|
|
29.3 |
% |
|
|
|
|
(1) See “FINANCIAL
MEASURES AND RATIOS.”
United
States onshore drilling statistics:(1) |
2022 |
|
|
2021 |
|
|
Precision |
|
|
Industry(2) |
|
|
Precision |
|
|
Industry(2) |
|
Average number of active land rigs for quarters ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
51 |
|
|
|
603 |
|
|
|
33 |
|
|
|
378 |
|
(1) United States lower
48 operations only.(2) Baker Hughes rig
counts.
Canadian onshore drilling statistics:(1) |
2022 |
|
|
2021 |
|
|
Precision |
|
|
Industry(2) |
|
|
Precision |
|
|
Industry(2) |
|
Average number of active land rigs for quarters ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
63 |
|
|
|
205 |
|
|
|
42 |
|
|
|
145 |
|
(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) |
2022 |
|
|
2021 |
|
|
% Change |
|
Revenue |
|
38,238 |
|
|
|
32,544 |
|
|
|
17.5 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
29,967 |
|
|
|
23,390 |
|
|
|
28.1 |
|
General and administrative |
|
1,732 |
|
|
|
1,352 |
|
|
|
28.1 |
|
Adjusted EBITDA(1) |
|
6,539 |
|
|
|
7,802 |
|
|
|
(16.2 |
) |
Adjusted EBITDA as a percentage of revenue(1) |
|
17.1 |
% |
|
|
24.0 |
% |
|
|
|
|
Well servicing statistics: |
|
|
|
|
|
|
|
|
|
|
|
Number of service rigs (end of period) |
|
123 |
|
|
|
123 |
|
|
|
- |
|
Service rig operating hours |
|
38,265 |
|
|
|
34,903 |
|
|
|
9.6 |
|
Service rig operating hour utilization |
|
46 |
% |
|
|
32 |
% |
|
|
|
|
(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 $41 million as compared
with $13 million in the first quarter of 2021. Our Adjusted EBITDA
was negatively impacted by higher share-based compensation costs
from our increased share price and lower CEWS program assistance.
During the quarter, we did not recognize any CEWS program
assistance as compared with $1 million in 2021.
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 2021 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) |
2022 |
|
|
2021 |
|
Cash settled share-based incentive plans |
|
47,211 |
|
|
|
9,868 |
|
Equity settled share-based
incentive plans: |
|
|
|
|
|
|
|
Executive PSU |
|
407 |
|
|
|
773 |
|
Share option plan |
|
20 |
|
|
|
131 |
|
Total share-based incentive compensation plan expense |
|
47,638 |
|
|
|
10,772 |
|
|
|
|
|
|
|
|
|
Allocated: |
|
|
|
|
|
|
|
Operating |
|
10,920 |
|
|
|
2,264 |
|
General and Administrative |
|
36,718 |
|
|
|
8,508 |
|
|
|
47,638 |
|
|
|
10,772 |
|
Cash settled share-based compensation expense
for the quarter was $47 million as compared with $10 million in
2021. The higher expense in 2022 was primarily due to the
strengthening of our share price which increased by 107% over the
first quarter. Our equity settled share-based compensation expense
for the first quarter of 2022 decreased to $0.4 million as our
Executive PSUs and share options fully vested early in the
quarter.
As of March 31, 2021, 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.
LIQUIDITY AND CAPITAL
RESOURCES
Liquidity
Amount |
|
Availability |
|
Used for |
|
Maturity |
Senior credit facility (secured) |
|
|
|
|
|
|
US$500 million1 (extendible, revolvingterm credit facility with
US$300 million accordion feature) |
|
US$182 million drawn and US$32 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$2 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 $1,193 million
outstanding under our Senior Credit Facility, Real Estate Credit
Facilities and unsecured senior notes as compared with $1,126
million at December 31, 2021.
The current blended cash interest cost of our
debt is approximately 6.3%.
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 period ending 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 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. We also have the option
to voluntarily terminate the Covenant Relief Period prior 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.
Unsecured Senior Notes
The unsecured senior notes require that we
comply with certain 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.
For further information, please see the
unsecured senior note indentures which are available on SEDAR and
EDGAR.
Covenants
At March 31, 2022, we were in compliance with
the covenants of our Senior Credit Facility and Real Estate Credit
Facilities.
|
Covenant |
|
At March 31, 2022 |
|
Senior Credit Facility |
|
|
|
|
|
Consolidated senior debt to consolidated covenant EBITDA(1) |
< 2.50 |
|
|
1.11 |
|
Consolidated covenant EBITDA to consolidated interest expense |
> 2.00 |
|
|
2.73 |
|
Real Estate Credit
Facilities |
|
|
|
|
|
Consolidated covenant EBITDA to consolidated interest expense |
> 2.00 |
|
|
2.73 |
|
(1) For purposes of calculating the leverage ratio consolidated
senior debt only includes secured indebtedness.
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 ended March 31, |
|
(Stated in thousands) |
2022 |
|
|
2021 |
|
Weighted average shares outstanding – basic |
|
13,479 |
|
|
|
13,349 |
|
Effect
of stock options and other equity compensation plans |
|
— |
|
|
|
— |
|
Weighted average shares outstanding – diluted |
|
13,479 |
|
|
|
13,349 |
|
QUARTERLY FINANCIAL SUMMARY
(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 and 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 |
) |
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2020 |
|
|
2021 |
|
Quarters ended |
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
Revenue |
|
|
189,759 |
|
|
|
164,822 |
|
|
|
201,688 |
|
|
|
236,473 |
|
Adjusted EBITDA(1) |
|
|
58,465 |
|
|
|
47,771 |
|
|
|
55,263 |
|
|
|
54,539 |
|
Net loss |
|
|
(48,867 |
) |
|
|
(28,476 |
) |
|
|
(37,518 |
) |
|
|
(36,106 |
) |
Net loss per basic and diluted
share |
|
|
(3.56 |
) |
|
|
(2.08 |
) |
|
|
(2.74 |
) |
|
|
(2.70 |
) |
Funds provided by
operations(1) |
|
|
26,639 |
|
|
|
27,489 |
|
|
|
35,282 |
|
|
|
43,430 |
|
Cash
provided by operations |
|
|
104,478 |
|
|
|
41,950 |
|
|
|
4,737 |
|
|
|
15,422 |
|
(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, 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). |
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) |
2022 |
|
|
2021 |
|
Capital spending by spend category |
|
|
|
|
|
|
|
Expansion and upgrade |
|
9,615 |
|
|
|
3,437 |
|
Maintenance and infrastructure |
|
26,787 |
|
|
|
4,999 |
|
|
|
36,402 |
|
|
|
8,436 |
|
Proceeds on sale of property, plant and equipment |
|
(2,847 |
) |
|
|
(3,324 |
) |
Net capital spending |
|
33,555 |
|
|
|
5,112 |
|
Changes
in non-cash working capital balances |
|
(3,212 |
) |
|
|
4,802 |
|
Cash used in investing activities |
|
30,343 |
|
|
|
9,914 |
|
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 March 31, |
|
|
At December 31, |
|
(Stated
in thousands of Canadian dollars) |
2022 |
|
|
2021 |
|
Current assets |
|
392,943 |
|
|
|
319,757 |
|
Current
liabilities |
|
230,195 |
|
|
|
238,120 |
|
Working capital |
|
162,748 |
|
|
|
81,637 |
|
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 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™ technologies and
EverGreen™ suite of 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,
2021, which may be accessed on Precision’s SEDAR profile at
www.sedar.com or under Precision’s EDGAR profile at www.sec.gov.
The forward-looking information and statements contained in this
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, 2022 |
|
|
December 31, 2021 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
24,102 |
|
|
$ |
40,588 |
|
Accounts receivable |
|
|
344,160 |
|
|
|
255,740 |
|
Inventory |
|
|
24,681 |
|
|
|
23,429 |
|
Total current assets |
|
|
392,943 |
|
|
|
319,757 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
867 |
|
|
|
867 |
|
Right-of-use assets |
|
|
50,879 |
|
|
|
51,440 |
|
Property, plant and equipment |
|
|
2,212,492 |
|
|
|
2,258,391 |
|
Intangibles |
|
|
22,752 |
|
|
|
23,915 |
|
Investments and other assets |
|
|
12,951 |
|
|
|
7,382 |
|
Total non-current assets |
|
|
2,299,941 |
|
|
|
2,341,995 |
|
Total assets |
|
$ |
2,692,884 |
|
|
$ |
2,661,752 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
215,587 |
|
|
$ |
224,123 |
|
Income taxes payable |
|
|
1,489 |
|
|
|
839 |
|
Current portion of lease obligations |
|
|
10,905 |
|
|
|
10,935 |
|
Current portion of long-term debt |
|
|
2,214 |
|
|
|
2,223 |
|
Total current liabilities |
|
|
230,195 |
|
|
|
238,120 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
31,251 |
|
|
|
26,728 |
|
Provisions and other |
|
|
6,439 |
|
|
|
6,513 |
|
Lease obligations |
|
|
45,295 |
|
|
|
45,823 |
|
Long-term debt |
|
|
1,174,462 |
|
|
|
1,106,794 |
|
Deferred tax liabilities |
|
|
11,828 |
|
|
|
12,219 |
|
Total non-current liabilities |
|
|
1,269,275 |
|
|
|
1,198,077 |
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Shareholders’ capital |
|
|
2,297,497 |
|
|
|
2,281,444 |
|
Contributed surplus |
|
|
76,164 |
|
|
|
76,311 |
|
Deficit |
|
|
(1,310,824 |
) |
|
|
(1,266,980 |
) |
Accumulated other comprehensive income |
|
|
130,577 |
|
|
|
134,780 |
|
Total shareholders’ equity |
|
|
1,193,414 |
|
|
|
1,225,555 |
|
Total liabilities and shareholders’ equity |
|
$ |
2,692,884 |
|
|
$ |
2,661,752 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF NET LOSS (UNAUDITED)
|
|
Three Months Ended March 31, |
|
|
(Stated
in thousands of Canadian dollars, except per share amounts) |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
351,339 |
|
|
$ |
236,473 |
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
Operating |
|
|
258,974 |
|
|
|
160,621 |
|
|
General and administrative |
|
|
55,510 |
|
|
|
21,313 |
|
|
Earnings before income taxes, gain on investments and other assets,
finance charges, foreign exchange, gain on asset
disposals and depreciation and amortization |
|
|
36,855 |
|
|
|
54,539 |
|
|
Depreciation and amortization |
|
|
68,457 |
|
|
|
72,013 |
|
|
Gain on
asset disposals |
|
|
(3,114 |
) |
|
|
(2,059 |
) |
|
Foreign
exchange |
|
|
(518 |
) |
|
|
(64 |
) |
|
Finance
charges |
|
|
20,730 |
|
|
|
22,446 |
|
|
Gain on investments and other assets |
|
|
(5,569 |
) |
|
|
— |
|
|
Loss before income taxes |
|
|
(43,131 |
) |
|
|
(37,797 |
) |
|
Income
taxes: |
|
|
|
|
|
|
|
|
|
Current |
|
|
970 |
|
|
|
784 |
|
|
Deferred |
|
|
(257 |
) |
|
|
(2,475 |
) |
|
|
|
|
713 |
|
|
|
(1,691 |
) |
|
Net loss |
|
$ |
(43,844 |
) |
|
$ |
(36,106 |
) |
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(3.25 |
) |
|
$ |
(2.70 |
) |
|
Diluted |
|
$ |
(3.25 |
) |
|
$ |
(2.70 |
) |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
|
|
Three Months Ended March 31, |
|
|
(Stated
in thousands of Canadian dollars) |
|
2022 |
|
|
2021 |
|
|
Net loss |
|
$ |
(43,844 |
) |
|
$ |
(36,106 |
) |
|
Unrealized loss on translation of assets and
liabilities of operations denominated in foreign currency |
|
|
(16,971 |
) |
|
|
(20,998 |
) |
|
Foreign exchange gain on net investment hedge
with U.S. denominated debt |
|
|
12,768 |
|
|
|
15,909 |
|
|
Tax expense related to net investment hedge of long-term debt |
|
|
— |
|
|
|
285 |
|
|
Comprehensive loss |
|
$ |
(48,047 |
) |
|
$ |
(40,910 |
) |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Three Months Ended March 31, |
|
|
(Stated
in thousands of Canadian dollars) |
|
2022 |
|
|
2021 |
|
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(43,844 |
) |
|
$ |
(36,106 |
) |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
Long-term compensation plans |
|
|
31,212 |
|
|
|
7,148 |
|
|
Depreciation and amortization |
|
|
68,457 |
|
|
|
72,013 |
|
|
Gain on
asset disposals |
|
|
(3,114 |
) |
|
|
(2,059 |
) |
|
Foreign
exchange |
|
|
(271 |
) |
|
|
558 |
|
|
Finance
charges |
|
|
20,730 |
|
|
|
22,446 |
|
|
Income
taxes |
|
|
713 |
|
|
|
(1,691 |
) |
|
Other |
|
|
— |
|
|
|
3 |
|
|
Gain on
investments and other assets |
|
|
(5,569 |
) |
|
|
— |
|
|
Income
taxes paid |
|
|
(227 |
) |
|
|
(161 |
) |
|
Interest
paid |
|
|
(38,161 |
) |
|
|
(18,766 |
) |
|
Interest received |
|
|
29 |
|
|
|
45 |
|
|
Funds provided by operations |
|
|
29,955 |
|
|
|
43,430 |
|
|
Changes in non-cash working capital balances |
|
|
(95,249 |
) |
|
|
(28,008 |
) |
|
|
|
|
(65,294 |
) |
|
|
15,422 |
|
|
Investments: |
|
|
|
|
|
|
|
|
|
Purchase
of property, plant and equipment |
|
|
(36,402 |
) |
|
|
(8,436 |
) |
|
Proceeds
on sale of property, plant and equipment |
|
|
2,847 |
|
|
|
3,324 |
|
|
Changes in non-cash working capital balances |
|
|
3,212 |
|
|
|
(4,802 |
) |
|
|
|
|
(30,343 |
) |
|
|
(9,914 |
) |
|
Financing: |
|
|
|
|
|
|
|
|
|
Issuance
of long-term debt |
|
|
88,124 |
|
|
|
20,000 |
|
|
Repayments of long-term debt |
|
|
(8,190 |
) |
|
|
(49,425 |
) |
|
Repurchase of share capital |
|
|
— |
|
|
|
(4,294 |
) |
|
Issuance
of common shares on the exercise of options |
|
|
1,396 |
|
|
|
— |
|
|
Debt
issuance costs |
|
|
— |
|
|
|
(244 |
) |
|
Lease
payments |
|
|
(1,567 |
) |
|
|
(1,621 |
) |
|
|
|
|
79,763 |
|
|
|
(35,584 |
) |
|
Effect of exchange rate changes on cash |
|
|
(612 |
) |
|
|
(865 |
) |
|
Increase (decrease) in cash |
|
|
(16,486 |
) |
|
|
(30,941 |
) |
|
Cash, beginning of period |
|
|
40,588 |
|
|
|
108,772 |
|
|
Cash, end of period |
|
$ |
24,102 |
|
|
$ |
77,831 |
|
|
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, 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 |
|
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome |
|
|
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 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(36,106 |
) |
|
|
(36,106 |
) |
Other
comprehensive loss for the period |
|
|
— |
|
|
|
— |
|
|
|
(4,804 |
) |
|
|
— |
|
|
|
(4,804 |
) |
Share
repurchases |
|
|
(4,294 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,294 |
) |
Share-based compensation reclassification |
|
|
— |
|
|
|
(1,455 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,455 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
2,359 |
|
|
|
— |
|
|
|
— |
|
|
|
2,359 |
|
Balance at March 31, 2021 |
|
$ |
2,281,444 |
|
|
$ |
73,819 |
|
|
$ |
132,777 |
|
|
$ |
(1,125,700 |
) |
|
$ |
1,362,340 |
|
FIRST QUARTER 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, April 28, 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 May 2, 2022 by dialing 855-859-2056 or
404-537-3406, passcode 8139367.
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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