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Precision Drilling posts loss on impairment charge

Workers at a Precision Drilling rig.

Nathan VanderKlippe/The Globe and Mail

Precision Drilling Corp. swung to a fourth-quarter net loss of $116.3-million, with the contract driller blaming a big impairment charge.

The quarterly loss, amounting to 42 cents per diluted share, compared with net earnings of $28-million or 10 cents per share in the comparable year-earlier period.

Revenue in the three months ended Dec. 31 was $534-million, down from $587.4-million in the 2011 period.

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Precision, which provides contract drilling and completion and production services in Canada, the United States and overseas, said Thursday that it recognized an after-tax asset decommissioning and goodwill impairment charge which, combined, reduced net earnings by $179-million or 63 cents per diluted share.

The decrease in revenue was primarily the result of lower activity levels across most business lines over the prior-year period and higher operating costs partially offset by increases in pricing.

Activity for Precision in the fourth quarter of 2012, as measured by drilling rig utilization days, decreased 23 per cent in Canada and by 19 per cent in the United States compared with 2011.

For the full year, Precision reported net earnings of $52-million or 18 cents per diluted share compared with net earnings of $193-million or 67 cents in 2011.

Excluding the impact of the asset decommissioning and goodwill impairment, net earnings per diluted share would have been 81 cents in 2012 compared with 93 cents in 2011. Revenue for the year was $2.04-billion, up from $1.95-billion.

Kevin Neveu, Precision's President and Chief Executive Officer, stated: "While 2012 finished with softening demand for our services in our Canadian and U.S. markets I am pleased that we continue to see excellent opportunities to deploy our high performance, high value rigs internationally, expanding our breadth in the Arabian Gulf and with integrated service providers in Mexico. Like most, we remain cautious on our outlook for near term energy services growth in North America, but remain firm believers in the long term opportunities for drilling and development of unconventional hydrocarbon resources."

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