* Q3 EPS C$0.29 vs C$0.21 expected
* Revenue up 37 pct at C$492.9 million
* Expects strong demand, higher dayrates for rigs
* Shares drop 4.5 pct (Adds comment, updates shares)
CALGARY, Alberta, Oct 21 (Reuters) - Precision Drilling Corp (PD.TO), Canada’s biggest oil and gas driller, said on Friday its quarterly profit rose by nearly half, thanks to booming North American demand that could last for the remainder of the year.
Despite volatile oil and depressed natural gas prices, the Calgary-based company plans to expand its drilling fleet in both Canada and the United States, while also moving units into the Saudi Arabian market.
Demand is rising as the oil and gas companies that hire Precision’s fleet to drill their wells move to target unconventional oil and rich natural-gas liquids fields like the Eagle Ford in Texas and the prolific Bakken field that lies primarily under North Dakota, Montana and Saskatchewan.
Because of a high call for its rigs, the company said it expects to be able to charge higher rents, known as dayrates, for the use of its fleet, as it continues to rebound from the recession two years ago when demand withered.
“Dayrates continued the upward trend of the past several quarters,” Kevin Neveu, the company’s president, said in a statement. “Precision expects dayrates to continue to increase through the fourth quarter of this year.”
Precision also said it is expanding internationally, sending three rigs to work in Saudi Arabia beginning in early 2012.
Despite the company’s positive outlook, its Toronto-listed shares fell on Friday, dropping 52 Canadian cents, or 4.5 percent, to C$11.08 by late afternoon as some investors worried that volatile oil markets could lead producers to hold the line on capital spending next year.
“This kind of pull-back may be a bit overdue,” said Chad Friess, an analyst as UBS Securities Canada.
“The street is just a little too optimistic about ... the pace of growth the company is going to be able to realize. It doesn’t really change the long-term outlook for the company but I think people got a little bit ahead of themselves on the numbers. But there wasn’t a lot of negative things that came out (of the earnings report).”
The company reported third-quarter net income of C$83.5 million ($82.7 million), or 29 Canadian cents a share, compared with C$56.3 million, or 20 Canadian cents, in the year-ago quarter.
The results, which included an income tax charge of 9 Canadian cents a share and a foreign exchange gain of a similar amount, beat the average analyst profit forecast of 21 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue jumped 37 percent to C$492.9 million, due to a rise in rates and drill utilization days in Canada and the United States.
Although wet weather hurt activity levels in Canada during the first part of the quarter, they increased rapidly in August and September, the company said in a statement.
$1=$1.01 Canadian Reporting by Scott Haggett in Calgary and Bhaswati Mukhopadhyay in Bangalore