Oct 24 (Reuters) - Precision Drilling Corp’s third-quarter net profit fell by more than a quarter as drilling activity slowed in North America because of lower customer spending, sending its shares down as much as 6 percent.
Precision, Canada’s largest oil and gas drilling contractor, also cut its 2013 capital costs estimates by C$45 million to C$609 million ($586.2 million).
“Precision’s third-quarter results reflect overall softness in customer demand and weak demand for Canadian completion and production services,” Chief Executive Kevin Neveu said in a statement.
Smaller companies such as Precision and U.S.-based Superior Energy Services and Nabors Industries are being squeezed by bigger and more efficient rivals including Schlumberger and Halliburton.
A non-recurring vendor issue and a difficult turnkey project also weighed on results, Neveu said.
Net earnings fell to C$29 million, or 10 Canadian cents per share, from C$39 million, 14 Canadian cents per share, a year earlier.
Drilling activity, as measured by drilling rig utilization days, decreased 1 percent in Canada and 11 percent in the United States, said Precision, which operates about a quarter of Canada’s onshore drilling rigs.
The company said it has firm customer commitments to add three new build rigs to its North American drilling fleet in the fourth quarter.
“Third-quarter results were well below our (and consensus) expectations, but the issues appear to be largely transitory, fourth quarter appears to be tracking well thus far,” Barclays analysts said in a research note.
The company’s shares fell to a low of C$10.30 at open, before recovering to trade down 3.3 percent at 10:50 ET.
The stock has risen 7 percent in the past three months, compared with a slight drop in the Thomson Reuters North America Oil & Gas Drilling Index