UPDATE 1-Precision Drilling profit beats estimates as costs fall

Mon Apr 27, 2015 7:21am EDT
 
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(Compares with estimates, adds details about results)

April 27 (Reuters) - Precision Drilling Corp reported a better-than-expected quarterly profit as job cuts and other cost-cutting measures helped Canada's largest drilling contractor maintain margins despite a steep decline in drilling activities.

Calgary-based Precision Drilling said it had 2,200 fewer employees on April 24 than it had at the end of 2014, when its workforce stood at 7,834.

The company said it also consolidated three operating facilities in North America.

Precision Drilling's contract drilling services operating expenses fell by 21 percent to C$251.2 million ($206.6 million) in the first quarter ended March 31, from a year earlier.

The fall in expenses helped the company mitigate the impact of a more than 50 percent drop in drilling activity in Canada and the United States due to a dramatic fall in global oil prices.

"During the first quarter, demand for North American land drilling services failed to meet even the most pessimistic forecasts as our customers continue to seek ways to reduce spending and budgets in this low commodity price environment," Chief Executive Kevin Neveu said in a statement on Monday.

Precision Drilling's rig count in the United States fell to 80 in the quarter from 94 a year earlier. Rig count in Canada fell to 69 from 127.

However, the company raised its capital spending forecast for the current year by 8.3 percent to C$506 million due to a stronger dollar.

Net earnings fell 76.3 percent to C$24 million, or 8 Canadian cents per share. Analysts on average had expected earnings of 5 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell nearly 24 percent to C$512.1 million but came in above the Wall Street estimate of C$496.4 million. ($1 = 1.2167 Canadian dollars) (Reporting by Sneha Banerjee in Bengaluru; Editing by Ted Kerr and Maju Samuel)