March 16, 2009 / 3:41 PM / 9 years ago

UPDATE 1-Ensign Energy profit rises despite outlook

*Net income rises 1.6 percent in fourth quarter

*Adjusted income rises 8.1 pct, beats expectations

*Says outlook weak

*Shares rise 2 pct

CALGARY, Alberta, March 16 (Reuters) - Ensign Energy Services Inc (ESI.TO) said on Monday its quarterly profit rose 1.6 percent as it cut costs as its oil and gas customers cut back on drilling due to plunging commodity prices.

Ensign, Canada’s No.1 oilfield-services firm by market value, reported fourth-quarter net income of C$73.8 million ($58.1 million), or 48 Canadian cents a share, up from C$72.6 million, or 47 Canadian cents, in the year-before quarter.

Adjusted net income, which excludes most one-time gains and charges, rose 8.1 percent to C$67.8 million, or 44 Canadian cents a share, from C$62.7 million, or 41 Canadian cents.

The adjusted income beat the average analyst per-share profit estimate of 41 Canadian cents, as compiled by Reuters Estimates.

The company’s revenue in the quarter rose 19 percent to C$460.4 million.

Shares in Canadian drilling firms have sagged as oil and natural gas prices have fallen and the recession forces energy companies to cut back on drilling to live within their means.

Ensign said its customers began cutting back on drilling during the fourth quarter as oil prices plunged from July peaks. To maintain its profits, Ensign retired 12 older drilling rigs and eight other units from its Canadian fleet.

It recorded an additional depreciation charge of C$11.3 million on the fleet changes.

Ensign said in a release that its outlook for the key winter drilling season in Western Canada has worsened as customers have reined in spending. It also said that it expects drilling activity in the second and third quarters of this year to be down significantly from year-before periods and that its U.S. operations are also seeing weaker demand.

Ensign’s shares rose 22 Canadian to C$10.73 at midmorning on Monday on the Toronto Stock Exchange. The stock has dropped 44 percent over the past 12 months.

$1=$1.27 Canadian Reporting by Scott Haggett; Editing by Peter Galloway

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