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(Reuters) - Precision Drilling Corp (PD.TO), Canada's largest drilling contractor, reported a 53 percent slide in quarterly profit as gas firms cut drilling in the face of weak demand and sliding gas prices.
Natural gas prices in the third quarter fell 29 percent from last year, pushing the number of rigs drilling for gas in the United States to a 13-year low this month. (r.reuters.com/dyb62s)
A pause in the rapid growth of drilling for oil in the North Dakota Bakken also hit earnings, Precision CEO Kevin Neveu said in a statement.
The fourth quarter should be stronger, as there is a seasonal uptick in Canadian drilling, said BMO Capital Markets analyst Michael Mazar, but he added the weak gas market would still weigh on demand.
"Ultimately they still need natural gas price support, especially in the United States, to stop the decline in natural gas directed drilling, he said.
Precision's net income fell to C$39 million ($39 million), or 14 Canadian cents per share, from C$83 million, or 29 Canadian cents per share, a year earlier. Revenue fell 2 percent to C$485 million.
Analysts were expecting earnings of 18 Canadian cents per share on revenue of C$481.4 million, according to Thomson Reuters, I/B/E/S.
Precision's shares dropped 1.7 percent on the Toronto Stock Exchange to C$7.39 after the earnings missed expectations but analyst Dana Benner of Altacorp Capital said there were positive signs.
"The expectation of many was that the results were going to be much worse both in Canada and the United States and they weren't, so I think this is a constructive base to head into the winter drilling season with," Benner said.
Despite the tough times, Precision, which operates about a quarter of Canada's onshore drilling rigs, raised its capital expenditure for the year to C$921 million from C$875 million to reflect costs related to two new service rig contracts and other upgrades. ($1 = 0.9939 Canadian dollars)
Editing by Rodney Joyce