(Reuters) - Precision Drilling Corp (PD.TO), Canada’s largest oil and gas drilling contractor, reported an 11 percent rise in quarterly profit on higher rates but cut its adjusted capital expenditure plan for the year citing lower-than-expected industry activity.
Precision, which runs about a quarter of Canada’s onshore drilling rigs, said lower commodity prices have led some customers to cut their capital spending budgets and this may continue to impact activity levels throughout the second half of the year.
The company cut its adjusted capital expenditure to C$875 million ($858.1 million) from C$975 million. Its initial budget for the year was C$1.14 billion.
“Precision remains mindful of the volatile and weakened oil prices and depressed natural gas prices, the reduction in our customers’ cash flow and the potential impact that has on our business,” Chief Executive Kevin Neveu said in a statement.
The company said it expects pricing pressure to continue for lower-tier assets if commodity price weakness and market uncertainty persist.
Net income in the second quarter rose to C$18.3 million, or 6 Canadian cents per share, from C$16.4 million, or 6 Canadian cents per share, a year earlier.
Revenue rose 11 percent to C$382 million.
Precision shares, which have fallen 55 percent in the past year, closed at C$7.45 on Tuesday on the Toronto Stock Exchange.
Reporting by Jeffrey Jones in Calgary and Bhaswati Mukhopadhyay in Bangalore; Editing by Supriya Kurane