* Profit tops forecasts
* Sees demand rising
* Shares rise 2.4 pct (Adds details)
By Scott Haggett
CALGARY. Alberta, Oct 21 (Reuters) - Precision Drilling Corp (PD.TO), Canada’s largest oil- and gas-well drilling company, said on Thursday robust oil prices and new shale-gas discoveries will lead to a busy winter drilling season and high demand for its rigs.
It made the forecast as it posted an 18 percent rise in quarterly operating earnings.
The company, which supplied a drilling rig to the effort that rescued 33 trapped Chilean miners last week, said it expects strong oil-company demand for rigs will support higher rental rates for its units in both Canada and the United States. It slashed rates when drilling collapsed during the financial crisis.
“All indications are for a strong rig demand driven by oil activity,” Kevin Neveu, Precision’s chief executive, said on a conference call. “We expect peak activity in the first quarter likely will exceed 2010’s first quarter and this year we have not been caught out with depressed pricing.”
Drilling activity in Canada and the United States has risen from recessionary lows as petroleum companies look to tap unconventional natural gas deposits such as shale fields, while oil prices are relatively strong.
Neveu said demand for the company’s rigs was strongest in the Bakken oil field, which lies under Montana, North Dakota and Saskatchewan, while demand for rigs from companies tapping shale-gas deposits in Texas and Pennsylvania was also strong.
Precision said third-quarter net earnings fell 15 percent to C$61.1 million, ($59.84 million), or 21 Canadian cents a share, from C$71.7 million, or 25 Canadian cents, in the third quarter of 2009. The 2009 quarter was bolstered by a C$63 million foreign exchange gain.
The most recent quarter included a C$18 million gain.
The company was expected to post a profit of 9 Canadian cents per share, according to the average of analysts’ estimates compiled by Thomson Reuters I/B/E/S.
Excluding the C$18 million gain and based on 284.3 million shares outstanding, Precision’s earning per share were 15 Canadian cents, beating the 9 Canadian cent expectation.
“Partially driving the beat was lower than expected income taxes,” Chad Friess, an analyst at UBS, said in a note to clients.
Operating earnings were C$65 million, compared with C$55 million in the year-before quarter.
Precision, which converted its business from a trust to a corporation earlier this year, said revenue rose 42 percent to C$359.15 million from C$253.3 million a year earlier.
Precision Drilling expects to have an average of about 96 rigs committed under term contracts in North America in the fourth quarter.
Precision shares rose 18 Canadian cents to C$7.70 on the Toronto Stock Exchange on Thursday.
$1=$1.03 Canadian Additional reporting by Aftab Ahmed in Bangalore; editing by Peter Galloway