(Reuters) - Precision Drilling Corp’s (PD.TO) (PDS.N) chief executive said 2015 was likely to be the most challenging year for rig contractors this decade as the energy industry adjusts to a slump in oil prices.
Canada’s largest drilling contractor reported a fourth-quarter loss after it took an asset and goodwill impairment charge, a knock-on effect of low oil prices.
Global crude prices have more than halved since June, forcing producers to cut back on spending as they pare exploration and production activities and cut the number of drilling rigs they will deploy this year.
“The clearest picture of this adjustment is in the reported North America industry rig count declines, which we expect will continue in the near term,” CEO Kevin Neveu said in a statement.
Precision Drilling’s rig count in the United States fell to 86 from 100 in the quarter ended Dec. 31, while that in Canada fell to 79 from 93.
The company said two new build rigs scheduled for customer delivery in 2015 have been deferred.
“Precision recruited, trained and developed many excellent crews .... over the past several years, and unfortunately we now don’t have work for many of these dedicated workers,” Neveu said, but did not indicate if the company is cutting jobs.
Cenovus Energy Inc (CVE.TO), Canada’s second-largest independent oil producer, on Thursday reported a quarterly loss that ballooned eight times and said it would cut 15 percent jobs, freeze salary hikes and cut spending.
Precision Drilling said it now expects capital expenses of C$467 million ($3723 million) in 2015, lower than the C$493 million it had forecast in December.
Precision Drilling posted a loss of C$114 million, or 39 Canadian cents per share, for the fourth quarter. This included a asset and goodwill impairment charge of C$222 million.
The company posted a profit of C$67.9 million, or 24 Canadian cents per share, a year earlier.
Reporting By Kanika Sikka and Darshana Sankararaman in Bengaluru; Editing by Robin Paxton and Savio D'Souza