April 21, 2010 / 3:42 PM / 8 years ago

UPDATE 2-Xtreme Coil falls on lower drilling activity in Mexico

* Cites uncertainty about contracted work at key project

* Says scaled back staffing levels in March and April

* Shares fall 6 pct (Recasts; adds details, updates stock activity)

April 21 (Reuters) - Xtreme Coil Drilling Corp XDC.TO said drilling activity at its Mexico operations was sequentially lower in the current quarter due to uncertainty about contracted work at a key project, sending its shares down 6 percent.

Xtreme said the developments in Mexico may result in a reduction in operating days in the second quarter and it is reviewing the short-term impact with its customer.

In March, Xtreme said one of its customers, an oilfield services company, had received notification from the operator that there was no remaining budget for expenditures relating to contracted work in the Chicontepec development project. [ID:nSGE62I0ID]

Later in March, the customer sent a second notification regarding a reduction in the scope of another drilling project.

Xtreme, which has 10 rigs under contract in Mexico, markets proprietary, dual-purpose drilling rigs to existing customers and to other international operating regions.

The company said most of its rigs in Mexico were on standby during March, and added that it scaled back its staffing levels in March and April to “significantly” reduce expenses.

Xtreme also said it may reconsider the initiation of its suspended expansion capital program later this year.

Shares of the company were down 22 Canadian cents at C$3.65 during Wednesday afternoon trade on the Toronto Stock Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Anne Pallivathuckal) ((isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net))

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