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Precision Drilling Corporation Announces 2013 Capital

Precision Drilling Corporation Announces 2013 Capital Expenditures,
Implementation of Quarterly Dividend Payment, New International
Contract and Asset Writedowns 
CALGARY, ALBERTA -- (Marketwire) -- 12/10/12 --  
(Canadian dollars, unless otherwise indicated) 
Precision Drilling Corporation ("Precision" or the "Corporation")
(TSX:PD) (NYSE:PDS) announced today that planned capital expenditures
for 2013 are $485 million and the implementation of a quarterly
dividend starting in the 4th quarter of 2012. Precision also
announced a new international contract award for two new build rigs
in Kuwait and asset writedowns as part of Precision's High
Performance, High Value strategy.  
Precision has scheduled a conference call and webcast to discuss
today's announcement. The call will begin promptly at 11:00 a.m. MT
(1:00 p.m. ET) today, December 10, 2012.  
The conference call dial in numbers are 416-340-2217 or 866-696-5910. 
2013 Capital Plan and Update on 2012 Capital Plan 
The 2013 capital expenditure plan includes $164 million for expansion
capital, $194 million for sustaining and infrastructure expenditures
and $127 million to upgrade existing rigs. Precision expects that the
$485 million will be split $417 million in the Contract Drilling
segment and $68 million in the Completion and Production Services
segment. 
Precision's expansion capital plan includes completing construction
of two remaining rigs from the 2012 new build program, one new build
rig for the North American market and the costs to complete about 50
percent of two new build rigs for international operations. All new
build rigs are backed by long-term contracts.  
Precision's sustaining and infrastructure capital plan is based upon
currently anticipated activity levels for 2013. Additionally, the
2013 capital plan includes the completion of the rig upgrades
previously announced in 2012 and approximately 20 additional rig
upgrades in 2013. 
Precision anticipates its 2012 capital expenditures to be
approximately $920 million, consistent with previous guidance. All
anticipated carry forward costs have been included in the 2013
capital expenditure guidance of $485 million.  
Implementation of Dividend 
Precision is pleased to announce that its board of directors has
approved the implemen
tation of a dividend which provides for an
annualized dividend of $0.20 per common share, payable quarterly, and
concurrently declared its first quarterly dividend of $0.05 per
common share, payable on December 28, 2012, to shareholders of record
on December 20, 2012. For Canadian income tax purposes, all dividends
paid by Precision on its common shares are designated as "eligible
dividends", unless otherwise indicated by Precision.  
International Contract Award 
Precision's wholly-owned international subsidiary, Grey Wolf Drilling
International Ltd., recently contracted two rigs with Kuwait Oil
Company ("KOC") for deep drilling operations in Kuwait. The two new
3000 HP rigs are expected to be deployed in 2014 for a firm service
period of five years with a possible one year extension period at
KOC's option. 
Asset Writedowns 
Precision also announced today the decommissioning of 52 drilling
rigs, including 42 Tier 3 drilling rigs and 10 Tier 2 drilling rigs.
Precision is exiting the Tier 3 contract drilling business and will
retain 26 Precision drilling rigs for seasonal, stratification and
turnkey drilling work. These rigs will be categorized as "PSST" rigs.
Precision's focus on the Tier 1 and Tier 2 market is aligned with the
Corporation's strategy, customer relationships and competitive
position.  
Precision expects to realize value from this decommissioning through
utilizing key components a
nd parts in the Corporation's existing
fleet as well as generating proceeds from future asset sales.
Precision expects to take a pre-tax charge to earnings, net of
salvage value, in the range of $180 million to $200 million for the
fourth quarter of 2012.  
After the rig decommissioning, completion of a review and
reclassification of certain existing rigs and delivery of the seven
contracted and undelivered new build rigs, Precision's drilling rig
fleet will consist of 326 drilling rigs, including 193 Tier 1 rigs,
107 Tier 2 rigs and 26 PSST rigs. The fleet will include 189 rigs in
Canada, 127 rigs in the United States and ten rigs internationally. 
Under International Financial Reporting Standards, Precision is
required to assess the carrying value of assets in its cash
generating units annually. Due to the decrease in natural gas well
drilling in Canada and the outlook for natural gas pricing, Precision
anticipates recording an impairment charge to the goodwill
attributable to its Canadian Directional Drilling operations in the
fourth quarter of 2012. 
Quote from Precision's CEO 
"Over the past five years Precision has transformed from its legacy
fleet, operating only in Canada, to a pre-eminent North American
service provider with 300 High Performance rigs" stated Kevin Neveu,
President & Chief Executive Officer. I am particularly proud that
Precision's High Performance people and Precision's Super Series rigs
are delivering exceptional operational and financial performance in
virtually every unconventional oil and gas play in Canada and the
United States. Since 2007 this transformation has included over 110
new build rigs and over 40 rigs upgraded, with all of these
investments supported by long-term customer contracts delivering
excellent financial returns to Precision. Our diversified geographic
breadth and our High Performance rig fleet provide revenue visibility
and stability which seemed improbable five years ago." 
"We are pleased to return value directly to our investors through the
implementation of a dividend. The cash flows generated by our
business are not subject to any single regional or seasonal market
dynamic and we expect that our organic growth in North America and
internationally combined with further geographic expansion of our
Completion and Production business and expansion of our directional
drilling integrated service will continue to deliver exceptional
returns throughout oil and gas commodity cycles. The contract
announced today for two new build Super Triple 3000 rigs for Kuwait
again confirms our belief that our High Performance, High Value
services have global appeal. While these rigs will not be deployed
until mid-2014, it is important to note that they will still be
operating under a long-term contract near the end of this decade and
it is this long-term stable 
nature of High Performance international
work we will continue to pursue." 
"Our decision to retire and dispose of the legacy Tier 3 rigs is an
important turning point in this transition for Precision. While some
legacy Tier 3 rigs may have market niche opportunities, the drilling
industry's growth and success will be driven by improved drilling
efficiency, safety performance and environmental responsibility.
Precision's diverse fleet of Super Series and Tier 2 rigs are highly
competitive in all of those markets and capable of delivering the
high performance today's customers demand. Currently our 2013 budget
includes three new build Super Series rigs for North America and the
two mentioned for Kuwait; however, Precision remains poised to seize
opportunities, which could include investing in new rigs, but as
always, we will seek out long-term customer contracts which meet or
exceed our return hurdles as we continue to grow our fleet
organically." 
Cautionary Statement Regarding Forward-Looking Information and
Statements 
Certain statements contained in this report, including statements
that contain words such as "could", "should", "can", "anticipate",
"estimate", "propose", "plan", "expect", "believe", "will", "may",
"continue", "project", "appears", "potential" and similar expressions
and statements relating to matters that are not historical facts
constitute "forward-looking information" within the meaning of
applicable Canadian securities legislation and "forward-looking
statements" within the meaning of the "safe harbor" provisions of the
United States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking information and statements").  
In particular, forward-looking information and statements include,
but are not limited to, the following: Precision expects that the
$485 million of the 2013 capital expenditure plan will be split $417
million in the Contract Drilling segment and $68 million in the
Completion and Production Services segment and further, the
allocation among expansion capital, sustaining and infrastructure
expenditures and upgrade capital; Precision anticipates its 2012
capital expenditures to be approximately $920 million and includes
all anticipated carry forward costs; the declaration of future
dividends; two new 3000 HP rigs are expected to be deployed in 2014
for a service term of 5 years with a possible 1 year extension at
KOC's option; that Precision is exiting the Tier 3 contract drilling
business and will retain 26 Precision drilling rigs for seasonal,
stratification and turnkey drilling work; Precision expects to
realize value from this decommissioning through utilizing key
components and parts in Precision's existing fleet as well as
generating proceeds from future asset sales; Precision expects to
take a pre-tax charge to earnings, net of expected proceeds, in the
range of $180 million to $200 million for the fourth quarter of 2012;
the tiering and location of Precision's rigs; Precision anticipates
recording an impairment charge to some of the goodwill attributable
to its Canadian Directional Drilling operations in the fourth quarter
of 2012; Precision expects that its organic growth in North America
and internationally combined with further geographic expansion of
Precision's Completion and Production business and expansion of
Precision's directional drilling integrated services will continue to
deliver exceptional returns throughout all points in the oil and gas
commodity cycle; and that the Super Triple 3000 rigs for Kuwait will
still be operating under a long-term contract near the end of this
decade and that it is this long-term stable nature of High
Performance international work Precision will continue to pursue; and
the drilling industry's growth and success will be driven by improved
drilling efficiency, safety performance and environmental
responsibility and that Precision's rigs will be capable of meeting
customer demands; currently Precision's 2013 budget includes three
new build rigs; and that Precision will seek out long-term customer
contracts which meet or exceed Precision's hurdles as Precision
continues to grow its fleet organically.  
These forward-looking information and statements are based on certain
assumptions and analysis made by the Corporation in light of its
experience and its perception of historical trends, current
conditions and expected future developments as well as other factors
it believes are appropriate in the circumstances. However, whether
actual results, performance or achievements will conform to the
Corporation's expectations and predictions is subject to a number of
known and unknown risks and uncertainties which could cause actual
results to differ materially from the Corporation's expectations.
Such risks and uncertainties include, but are not limited to:
fluctuations in the price and demand for oil and natural gas;
fluctuations in the level of oil and natural gas exploration and
development activities; fluctuations in the demand for contract
drilling, well servicing and ancillary oilfield services; capital
market liquidity available to fund customer drilling programs;
availa
bility of cash flow, debt and/or equity sources to fund the
Corporation's capital and operating requirements, as needed;
variability of future dividends to be paid; the effects of seasonal
and weather conditions on operations and facilities; the existence of
competitive operating risks inherent in contract drilling, well
servicing and ancillary oilfield services; general economic, market
or business conditions; changes in laws or regulations;
interpretation of tax filing position for prior period transactions;
the availability of qualified personnel, management or other key
inputs; currency exchange fluctuations; and other unforeseen
conditions which could impact the use of services supplied by
Precision. 
Consequently, all of the forward-looking information and statements
made in this report are qualified by these cautionary statements and
there can be no assurance that the actual results or developments
anticipated by the Corporation will be realized or, even if
substantially realized, that they will have the expected consequences
to, or effects on, the Corporation or its business or operations.
Readers are therefore cautioned not to place undue reliance on such
forward-looking information and statements. Except as may be required
by law, the Corporation assumes no obligation to update publicly any
such forward-looking information and statements, whether as a result
of new information, future events or otherwise. 
About Precision 
Precision is a leading provider of safe and High Performance, High
Value services to the oil and gas industry. Precision provides
customers with access to an extensive fleet of contract drilling
rigs, directional drilling services, well service & snubbing rigs,
coiled tubing services, camps, rental equipment, and wastewater
treatment units backed by a comprehensive mix of technical support
services and skilled, experienced personnel. 
Precision is headquartered in Calgary, Alberta, Canada. Precision is
listed on the Toronto Stock Exchange under the trading symbol "PD"
and on the New York Stock Exchange under the trading symbol "PDS". 
Contacts:
Precision Drilling Corporation
Carey Ford
Vice President, Finance and Investor Relations
403.716.4575
403.716.4755 (FAX) 
Precision Drilling Corporation
800, 525 - 8th Avenue S.W.
Calgary, Alberta, Canada  T2P 1G1
www.precisiondrilling.com
 
 
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