UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For April 28, 2005
Commission File Number: 001-14534
PRECISION DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
4200, 150 - 6TH AVENUE S.W.
CALGARY, ALBERTA
CANADA T2P 3Y7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [_] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1). _______
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): _______
Note: Regulation S-T Rule 101(b)(7) only permits the submission in
paper of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
-------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRECISION DRILLING CORPORATION
Per: /s/ Jan M. Campbell
------------------------
Jan M. Campbell
Corporate Secretary
Date: April 28, 2005
Calgary, Alberta, Canada - April 28, 2005
PRECISION DRILLING CORPORATION ANNOUNCES
RESULTS FOR THE FIRST QUARTER -
ENERGY SERVICES GENERATES 107% EARNINGS GROWTH
Precision Drilling Corporation ("Precision" or the "Corporation") announced
today that income from continuing operations for the first quarter of 2005 was
$138.5 million or $2.22 per diluted share, compared to $106.1 million or $1.88
per diluted share for the first quarter of 2004.
Revenue increased by 20% to $792 million, with operating earnings substantially
surpassing this improvement, increasing 32% to $224 million. Year-over-year,
Precision Drilling's three business segments increased operating earnings by
107% in Energy Services, 43% in Rental and Production and 16% in Contract
Drilling. These improvements were the result of:
o The successful integration of the Compact(TM) wireline services and the
internationally based land drilling rigs acquisitions;
o Increased service pricing in response to continued strong demand; and
o Enhanced equipment utilization in Energy Services.
It is important to note that this improvement in year-over-year profitability
occurred despite decreased overall activity levels in Canada, demonstrating the
success of Precision's efforts to expand internationally, as well as its pricing
strength in the Canadian market.
International revenue in the first quarter of 2005 increased 51% over the same
period in 2004 due to our successful acquisition of 31 internationally-based
land drilling rigs and geographic expansion into high growth markets by our
Energy Services segment. Internationally, Energy Services generated higher
earnings across all product lines in nearly all of the regions in which the
company operates.
SUMMARY RESULTS
Three months ended March 31,
2005 2004 % Change
-----------------------------------------------------------------------------------------------------------
Revenue $791,876 $659,365 20.1
Operating earnings 224,241 169,631 32.2
Earnings from continuing operations 138,518 106,082 30.6
Net earnings 138,518 100,519 37.8
Diluted earnings per share:
From continuing operations $ 2.22 $ 1.88 18.1
Net earnings $ 2.22 $ 1.79 24.0
-----------------------------------------------------------------------------------------------------------
Funds provided by continuing operations $204,989 $178,186 15.0
===========================================================================================================
CONTRACT DRILLING
Revenue in the Contract Drilling segment increased by 11% to $443 million in the
first quarter compared to the same period in 2004. This revenue increase was
primarily driven by the acquisition of 31 internationally based land drilling
rigs in May 2004 as well as higher pricing levels in the Canadian market. This
revenue growth rate was partially reduced by lower activity levels in Canada due
to an early spring breakup, which shortened the winter drilling season.
Operating earnings of $171 million in the first quarter of 2005 increased 16%
compared to the same period in 2004. The strong growth in operating earnings was
driven by pricing improvements in Canada which was partially offset by activity
in the Eastern Hemisphere where current margins are lower. However, recent
contract awards in the Eastern Hemisphere have been for substantially increased
drilling rig day rates and improved utilization is anticipated over the coming
months.
The Canadian drilling rig fleet achieved 13,999 operating days, for an overall
utilization rate of 68% in the quarter, compared to 14,768 operating days and a
72% utilization rate in the first quarter of 2004. The service rig operation saw
operating hours decrease by 7% year-over-year from 150,693 in the first quarter
of 2004 compared to 139,674 in the first quarter of 2005.
ENERGY SERVICES
Energy Services generated revenue of $282 million in the first quarter of 2005,
an increase of 35% or $74 million over the same period in 2004. Of this
increase, $36 million related to the Compact(TM) wireline services acquisition
in May, 2004. Excluding the impact of this acquisition, the remaining $38
million of growth was achieved primarily in international operations with
Canadian revenues effectively flat year-over-year. In Canada, strong activity in
the first two months of the year was offset by the effects of an early spring
break up.
Wireline Services revenue was $144 million in the first quarter of 2005, an
increase of $52 million over the same period in 2004. Excluding the impact of
the Compact(TM) wireline services acquisition, revenues increased by $16 million
or 18%. Of this increase, $5 million was generated in Canada as a result of
increased activity in the first two months of the year, partially offset by the
effects of an early spring break up. The remaining $11 million increase was
driven by improved International results based on increased activity in the
United States, Mexico, Latin America, Asia Pacific and the Middle East.
Drilling & Evaluation Services revenue increased 25% to $100 million in the
first quarter of 2005 from $80 million in the first quarter of 2004. During the
quarter, revenues from international operations grew by $28 million, driven by
increased utilization of Precision's LWD/HEL tools and rotary steerable systems,
which together provided $14 million of incremental revenue. Offsetting these
results were the effects of an early spring break up in 2005 combined with
increased commoditization of the MWD tools in Canada.
Revenues from Production Services grew by 20% to $36 million in the first three
months of 2005 from $30 million in the first quarter of 2004, reflecting higher
activity in Canada and the Middle East.
Operating earnings increased by $29 million or 107% to $56 million for the first
quarter of 2005, compared to $27 million in the same period of 2004. This
increase is attributable to the Compact(TM) wireline services acquisition,
combined with revenue growth across all product lines and operating cost
improvements. Cost improvements as a percentage of revenue have occurred in the
segment's mature markets as a result of cost control initiatives, and in its
developing markets through the achievement of critical mass. Increased
depreciation, resulting from an increased tool fleet, partially offset these
gains.
RENTAL AND PRODUCTION
The Rental and Production segment saw a 32% increase in revenue and a 43%
increase in operating earnings in the first quarter of 2005 compared to the same
period in 2004. These increases were driven primarily by the industrial plant
maintenance business and its increased activity in the Alberta oil sands
projects.
STOCK SPLIT
As previously announced on March 10, 2005, Precision's Board of Directors has
approved a stock split of its Common Shares on a two-for-one basis, pending
shareholder approval.
CERTAIN STATEMENTS CONTAINED IN THIS PRESS RELEASE MAY CONTAIN WORDS SUCH AS
"ANTICIPATE", "COULD", "SHOULD", "EXPECT", "BELIEVE", "WILL" AND SIMILAR
EXPRESSIONS AND STATEMENTS RELATING TO MATTERS THAT ARE NOT HISTORICAL FACTS.
THESE STATEMENTS ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
PRECISION TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCES OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH
FACTORS INCLUDE FLUCTUATIONS IN THE MARKET FOR OIL- AND GAS- AND RELATED
PRODUCTS AND SERVICES; COMPETITION; POLITICAL AND ECONOMIC CONDITIONS IN
COUNTRIES IN WHICH PRECISION DOES BUSINESS; THE DEMAND FOR SERVICES PROVIDED BY
PRECISION; CHANGES IN LAWS AND REGULATIONS, INCLUDING ENVIRONMENTAL REGULATIONS,
TO WHICH PRECISION IS SUBJECT AND OTHER FACTORS, WHICH ARE DESCRIBED IN FURTHER
DETAIL IN PRECISION'S FILINGS WITH THE US SECURITIES AND EXCHANGE COMMISSION.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
THREE MONTHS ENDED
MARCH 31,
CDN $000'S, EXCEPT PER SHARE AMOUNTS (UNAUDITED) 2005 2004
----------------------------------------------------------------------------------------------------------
Revenue $ 791,876 $ 659,365
Expenses:
Operating 449,089 386,188
General and administrative 51,912 41,783
Depreciation and amortization 56,736 49,628
Research and engineering 11,323 11,810
Foreign exchange (1,425) 325
----------------------------------------------------------------------------------------------------------
567,635 489,734
----------------------------------------------------------------------------------------------------------
Operating earnings 224,241 169,631
Interest 11,748 8,188
----------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 212,493 161,443
Income taxes:
Current 70,489 35,541
Future 3,486 19,820
----------------------------------------------------------------------------------------------------------
73,975 55,361
----------------------------------------------------------------------------------------------------------
Earnings from continuing operations 138,518 106,082
Discontinued operations, net of tax -- (5,563)
----------------------------------------------------------------------------------------------------------
Net earnings 138,518 100,519
Retained earnings, beginning of period 1,041,683 794,279
----------------------------------------------------------------------------------------------------------
Retained earnings, end of period $ 1,180,201 $ 894,798
----------------------------------------------------------------------------------------------------------
Earnings per share from continuing operations:
Basic $ 2.26 $ 1.91
Diluted $ 2.22 $ 1.88
----------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 2.26 $ 1.81
Diluted $ 2.22 $ 1.79
==========================================================================================================
Common shares outstanding (000's) 61,330 55,753
Weighted average shares outstanding (000's) 61,157 55,485
Diluted shares outstanding (000's) 62,438 56,309
CONSOLIDATED BALANCE SHEETS
MARCH 31, December 31,
CDN $ 000'S 2005 2004
-----------------------------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 177,563 $ 122,012
Accounts receivable 818,653 690,999
Inventory 120,201 114,352
Future income tax asset 9,266 8,711
-----------------------------------------------------------------------------------------------------------
1,125,683 936,074
Property, plant and equipment, net of accumulated depreciation 1,954,851 1,945,521
Intangibles, net of accumulated amortization 188,550 191,665
Goodwill 734,979 735,413
Other assets 8,658 9,116
Future income tax asset 27,133 32,984
-----------------------------------------------------------------------------------------------------------
$ 4,039,854 $ 3,850,773
-----------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 344,649 $ 340,372
Income taxes payable 53,445 31,103
Current portion of long-term debt 18 18
Future income tax liability 4,933 7,270
-----------------------------------------------------------------------------------------------------------
403,045 378,763
Long-term debt 717,095 718,870
Future income taxes 432,801 431,399
Shareholders' equity:
Share capital 1,298,769 1,274,967
Contributed surplus 29,588 26,024
Cumulative translation adjustment (21,645) (20,933)
Retained earnings 1,180,201 1,041,683
-----------------------------------------------------------------------------------------------------------
2,486,913 2,321,741
-----------------------------------------------------------------------------------------------------------
$ 4,039,854 $ 3,850,773
===========================================================================================================
Common shares outstanding (000's) 61,330 60,790
Common share purchase options outstanding (000's) 2,994 3,348
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED
MARCH 31,
CDN $000'S (UNAUDITED) 2005 2004
------------------------------------------------------------------------------------------------------------
Cash provided by (used in):
Continuing operations:
Earnings from continuing operations $ 138,518 $ 106,082
Items not affecting cash:
Depreciation and amortization 56,736 49,628
Stock-based compensation 4,875 2,051
Future income taxes 3,486 19,820
Amortization of deferred financing costs 459 320
Unrealized foreign exchange loss on long-term monetary items 915 285
------------------------------------------------------------------------------------------------------------
Funds provided by continuing operations 204,989 178,186
Changes in non-cash working capital balances (107,457) (110,258)
------------------------------------------------------------------------------------------------------------
97,532 67,928
Discontinued operations:
Funds used in discontinued operations -- (1,588)
Changes in non-cash working capital balances of
discontinued operations -- 7,612
------------------------------------------------------------------------------------------------------------
-- 6,024
Investments:
Business acquisitions -- (630)
Purchase of property, plant and equipment (72,960) (53,728)
Purchase of intangibles (20) --
Proceeds on sale of property, plant and equipment 8,512 4,713
Proceeds on disposal of discontinued operations -- 25,746
------------------------------------------------------------------------------------------------------------
(64,468) (23,899)
Financing:
Increase in long-term debt - 1,263
Repayment of long-term debt (4) (4,365)
Issuance of common shares on exercise of options 22,491 30,535
Change in bank indebtedness -- (78,647)
------------------------------------------------------------------------------------------------------------
22,487 (51,214)
------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 55,551 (1,161)
Cash and cash equivalents, beginning of period 122,012 21,370
------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 177,563 $ 20,209
============================================================================================================
SEGMENT INFORMATION
THREE MONTHS ENDED MARCH 31, 2005 Contract Energy Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
----------------------------------------------------------------------------------------------------------------------------------
Revenue $ 443,192 $ 281,725 $ 66,959 $ -- $ 791,876
Operating earnings 170,675 56,011 13,977 (16,422) 224,421
Research and engineering - 11,323 -- -- 11,323
Depreciation and amortization 27,763 24,213 3,311 1,449 56,736
Total assets 1,999,672 1,682,192 194,736 163,254 4,039,854
Goodwill 350,507 355,770 28,702 -- 734,979
Capital expenditures 19,694 35,935 10,764 6,587 72,980
----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 2004** Contract Energy Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
----------------------------------------------------------------------------------------------------------------------------------
Revenue $ 400,468 $ 208,197 $ 50,700 $ -- $ 659,365
Operating earnings 147,719 27,117 9,741 (14,946) 169,631
Research and engineering - 11,810 - -- 11,810
Depreciation and amortization 24,487 20,428 3,302 1,411 49,628
Total assets 1,503,219 1,319,876 177,513 55,927 3,056,535
Goodwill 257,531 242,314 28,702 -- 528,547
Capital expenditures* 17,201 25,723 6,465 4,339 53,728
----------------------------------------------------------------------------------------------------------------------------------
* excludes acquisitions
** certain comparative figures have been reclassified to conform to
the current financial statement presentation
CANADIAN DRILLING OPERATING STATISTICS
FOR THE THREE MONTHS ENDED MARCH 31,
2005 2004
---------------------------------- -----------------------------------
Market Market
Precision Industry* Share % Precision Industry* Share %
---------------------------------- -----------------------------------
Number of drilling rigs 229 712 32.2 226 679 33.3
Number of operating days (spud to release) 13,999 45,670 30.7 14,768 45,189 32.7
Wells drilled 2,162 6,184 35.0 2,283 6,159 37.1
Average days per well 6.5 7.4 6.5 7.3
Metres drilled (000's) 2,566 7,357 34.9 2,571 7,087 36.3
Average metres per day 183 161 174 157
Average metres per well 1,187 1,190 1,126 1,151
Rig utilization rate (%) 67.9 71.3 71.9 73.2
* Excludes non-CAODC rigs.
A conference call to review the first quarter 2005 results has been scheduled
for 12:00 noon MST on Thursday, April 28, 2005. The conference call dial-in
number is 1-800-814-4859.
A live webcast will be accessible at www.precisiondrilling.com.
Precision Drilling Corporation (TSX: PD and PD.U; NYSE: PDS) is a global
oilfield services company providing a broad range of drilling, production and
evaluation services with focus on fulfilling customer needs through
fit-for-purpose technologies for the maturing oilfields of the 21st century.
With corporate offices in Calgary, Alberta, Canada, corporate subsidiary offices
in Houston, Texas, and research facilities in the U.S. and Europe, Precision
employs more than 12,000 people conducting operations in more than 30 countries.
Precision is committed to providing efficient and safe services to create value
for our customers, our shareholders and our employees.
FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT
FINANCE AND CHIEF FINANCIAL OFFICER, TELEPHONE: (403) 716-4500, FAX: (403)
264-0251; WEBSITE: WWW.PRECISIONDRILLING.COM.