April 26, 2011 / 10:26 AM / 7 years ago

UPDATE 2-Precision Drilling profit up on rise in drilling, higher dayrates

* Revenue up 41 pct

* Raises 2011 capex forecast

* Says oil plays in Canada to boost new build rigs (Adds 2011 capex outlook, rig count, other details)

April 26 (Reuters) - Precision Drilling Corp , Canada’s largest oil- and gas-well drilling company, reported a 15 percent rise in first-quarter profit helped by increase in drilling and higher dayrates in the United States and Canada.

The company said customer demand, specifically for the Bakken, Eagle Ford and Permian Basin, will result in additional new build rig opportunities throughout 2011.

Oil plays in Canada, such as the Cardium and Viking, will also provide more opportunities for new build rigs during the year, the company said in a statement.

Increased liquidity in the capital markets and higher oil prices is providing some of the company’s customers with cash flow to increase drilling programs.

Precision, whose peers include Trinidad Drilling Ltd and Ensign Energy Services Inc , also expects its 2011 capital budget to be about C$514 million, up from its prior view of about C$423 million.

Precision said C$442 million is expected to be for the contract drilling segment and C$72 million for the completion and production services segment.

An additional C$81 million of capital expenditure is expected to carry forward to 2012, the company said.

The company expects to have an average of about 110 rigs committed under term contracts in North America in the second quarter.

For 2012, Precision has term contracts in place for an average of 44 rigs, with 28 in Canada and 16 in the United States and Mexico.

The company currently has an average of 36 rigs in Canada under term contract, 61 in the United States and two in Mexico.

The improvements in dayrates in Canada and the United States are expected to hold, and possibly improve, for the remainder of the year, the company said .

For the first quarter, the company reported net income of C$65.6 million ($68.7 million), or 23 Canadian cents a share, compared with C$56.9 million, or 20 Canadian cents a share, a year ago.

Financing costs for the first quarter were C$43 million, which included a one-time charge of C$27 million, or 7 Canadian cents a share, related to repayment of senior unsecured notes.

Precision shares closed at C$14.80 on Monday on the Toronto Stock Exchange. They have risen 84 percent over the past 12 months on a rebound in drilling activity. ($1 = 0.954 Canadian Dollars) (Reporting by Bhaswati Mukhopadhyay; Editing by Prem Udayabhanu)

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