* Q2 EPS C$0.06 vs loss C$0.25/shr year ago
* Revenue up 32 pct at C$345.3 million
* Continues to see strong demand for Tier 1 rigs
* Shares rise 7 percent to near 3-year high (Adds CEO comments)
By Bhaswati Mukhopadhyay
BANGALORE, July 22 (Reuters) - Precision Drilling Corp (PD.TO) reported a profit for a fourth straight quarter on Friday as higher oil prices led to increased drilling activity and rates in North America.
Canada’s largest oil and gas drilling contractor, which also raised its capital budget for the second time in as many months, said it continued to see strong demand for rigs, driven by a boom in drilling for shale oil and liquids-rich gas projects.
“Obviously this trend is underpinned by the resilient oil commodity price, but it’s also driven by the success our customers are achieving using horizontal drilling to develop these resource plays previously viewed as technically or economically unfeasible,” Precision Chief Executive Kevin Neveu told analysts.
The healthy results boosted Precision shares as much as 7 percent to a near a three-year high.
Precision, whose peers include Trinidad Drilling Ltd (TDG.TO) and Ensign Energy Services Inc (ESI.TO), said more liquidity in capital markets and higher oil prices were providing some of its customers with the cash flow to increase drilling programs.
U.S. crude oil prices CLc1 soared 32 percent to average $103.49 a barrel in the quarter.
In the second quarter, drilling rig utilization days in Canada rose 14 percent, while in the United States they climbed 16 percent.
“Over the last two, three years, Precision has been expanding its rig fleet and positioning itself well for the trends that we are seeing in North America towards desire for companies to have more technology to pursue some of these more complicated shale oil plays,” said analyst Michael Mazar of BMO Capital Markets.
Mazar, who has an “outperform” rating on Precision, said the stock was being driven higher on Friday by the U.S. unit’s results, which were better than expected.
Customer drilling programs delayed by the wet Canadian spring have served to further enhance demand for the second half of the year as the weather improves, said the company, which booked 21 rigs during the second quarter.
Precision shares, which have climbed 57 percent this year, were up 97 Canadian cents, or 6 percent, at C$16.36 on the Toronto Stock Exchange. They earlier touched a high of C$16.50.
Neveu said the company has orders for 30 new drilling rigs, 27 of which are fully contracted already. All but two of the new units target oil and liquids-rich gas.
Additional new-build opportunities in the year coming from customers operating in the Bakken, Eagle Ford and Permian Basins in the United States.
Mazar, who thinks Precision is one of the best-positioned drillers in North America, said it can still grow more in the Canadian plays — the Cardium, Viking and Duvernay shale.
In the second quarter, Precision earned C$16.4 million ($17.3 million), or 6 Canadian cents a share, a penny below analysts’ average forecast.
The profit compared with a loss of C$69.4 million, or 25 Canadian cents a share, a year earlier, when the company was hit by higher financial costs and a foreign exchange loss.
Revenue rose 32 percent to C$345.3 million. Analysts, on average, had expected C$329.8 million in revenue, according to Thomson Reuters I/B/E/S.
The company now expects 2011 capital expenditures of about C$841 million, up from its earlier forecast of C$790 million.
“As contracted rigs roll off into a stronger spot-market pricing environment and our new build and upgrade rigs enter the markets, we expect to see continued improvements in our average revenue per day throughout the year,” Neveu said.
$1=$0.95 Canadian Additional reporting by Jeffrey Jones in Calgary; editing by Maju Samuel, Saumyadeb Chakrabarty and Rob Wilson