Precision Drilling posts smaller-than-expected quarterly loss

(Reuters) - Canadian oilfield services contractor Precision Drilling Corp reported a smaller-than-expected quarterly loss on Monday, but said some North American customers asked to idle rigs after cutting budgets for the second half of the year amid weaker oil prices.

Global crude prices were stronger in the first half compared with the same period a year ago, when benchmark West Texas Intermediate (WTI) CLc1 fell below $27 a barrel, prompting oil and gas companies to put more rigs to work. The international Brent crude benchmark averaged $50.79 per barrel in the second quarter of the year, up 8 percent from 2016.

Although average prices are up this year, they fell in the second quarter compared with the first quarter, prompting oil producers such as Hess Corp and Anadarko Petroleum Corp to pare capital spending budgets for the rest of the year.

Amid reduced spending plans, North American customers have asked Precision to pull out “one or two rigs,” Chief Executive Officer Kevin Neveu said on Monday during the company’s second-quarter earnings call.

“We expect those rigs will be re-contracted, likely immediately when they get released,” he added.

Precision Drilling’s U.S. rig count rose to 59 in its second quarter ended June 30, up from 24 rigs a year earlier. The company had 29 active rigs in Canada, up from 13 rigs a year earlier.

The company said it added term contracts for nine of its Super Series rigs during the third quarter.

The company’s net loss narrowed to C$36.1 million ($29 million), or 12 Canadian cents per share, in the quarter, from C$57.7 million, or 20 Canadian cents per share, a year earlier.

Revenue rose to C$275.5 million from C$164 million.

Precision’s stock was down about 4 percent on Monday at C$3.62.

Analysts on average had expected a loss of 20 Canadian cents and revenue of C$272.3 million, according to Thomson Reuters I/B/E/S.

Reporting by Ahmed Farhatha in Bengaluru and Liz Hampton in Houston; Editing by Sai Sachin Ravikumar and Lisa Shumaker