Precision Drilling Announces Asset Divestitures, Senior Note Redemption and Provides International Contract Update
March 18 2019 - 06:00AM
This news release contains "forward-looking
information and statements" within the meaning of applicable
securities laws. For important information with respect to such
forward-looking information and statements and the further
assumptions and risks to which they are subject, see the
"Cautionary Statement Regarding Forward-Looking Information and
Statements" later in this news release. All values in Canadian
dollars except as indicated.
Precision Drilling Corporation (“Precision” or the “Company”)
(TSX:PD; NYSE:PDS) is pleased to announce transactions to divest
our five Mexico based drilling rigs and our water treatment
business branded Terra Water Systems. We have entered into an
agreement to sell five idle drilling rigs and ancillary equipment
currently located in Mexico for US$48 million. To date, the Company
has received US$30 million for the sale of three drilling rigs and
ancillary equipment with the balance of US$10 million and US$8
million due upon delivery of the fourth and fifth rigs in March and
April 2019, respectively. At the conclusion of this transaction,
Precision will have no assets in Mexico. Regarding Terra Water
Systems, Precision recently closed the transaction to divest the
assets and business for an undisclosed cash consideration.
Precision continues to explore divesting other non-core assets and
businesses to focus on our High Performance, High Value land
drilling business and efficiency-driven technology initiatives.
Separately, the Company has initiated the
redemption of US$30 million of its 6.50% senior notes due 2021 on a
pro rata basis with available cash on hand. The redemption payment
will be made on April 16, 2019. Debt reduction and de-leveraging
remains Precision’s top priority and we are pleased to accelerate
our program with this redemption.
We are also pleased to announce that the Company
has signed three-year contract renewals for two rigs in Saudi
Arabia, effective March 1, 2019. These rigs had been working on
shorter-term extensions since August 2018, when their original
contracts expired. Precision’s third active rig in Saudi Arabia is
currently contracted through 2022. In Kuwait, Precision signed
one-year extensions on two rigs that were set to expire mid-year
and remain on track to deliver our sixth new build rig in July.
Once delivered, we will have nine rigs operating in the Middle East
on long-term contracts, providing firm line of sight on operating
activity and stable cash flows in this region.
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", "intend", "plan", "expect",
"believe", "will", "may", "continue", "project", "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:
- our planned capital expenditures for 2019;
- anticipated activity levels in 2019 and our scheduled
infrastructure projects; and
- anticipated cash flows, proceeds from rig sales and future debt
repayments.
These forward-looking information and statements
are based on certain assumptions and analysis made by Precision in
light of our experience and our perception of historical trends,
current conditions, expected future developments and other factors
we believe are appropriate under the circumstances. These include,
among other things:
- the fluctuation in oil prices may pressure customers into
reducing or limiting their drilling budgets;
- the status of current negotiations with our customers and
vendors;
- customer focus on safety performance;
- existing term contracts are neither renewed nor terminated
prematurely;
- our ability to deliver rigs to customers on a timely basis;
and
- the general stability of the economic and political
environments in the jurisdictions where we operate.
Undue reliance should not be placed on
forward-looking information and statements. Whether actual results,
performance or achievements will conform to our expectations and
predictions is subject to a number of known and unknown risks and
uncertainties which could cause actual results to differ materially
from our expectations. Such risks and uncertainties include, but
are not limited to:
- volatility in the price and demand for oil and natural
gas;
- fluctuations in the demand for contract drilling, well
servicing and ancillary oilfield services;
- our customers’ inability to obtain adequate credit or financing
to support their drilling and production activity;
- changes in drilling and well servicing technology which could
reduce demand for certain rigs or put us at a competitive
disadvantage;
- shortages, delays and interruptions in the delivery of
equipment supplies and other key inputs;
- the effects of seasonal and weather conditions on operations
and facilities;
- the availability of qualified personnel and management;
- a decline in our safety performance which could result in lower
demand for our services;
- changes in environmental laws and regulations such as increased
regulation of hydraulic fracturing or restrictions on the burning
of fossil fuels and greenhouse gas emissions, which could have an
adverse impact on the demand for oil and gas;
- terrorism, social, civil and political unrest in the foreign
jurisdictions where we operate;
- fluctuations in foreign exchange, interest rates and tax rates;
and
- other unforeseen conditions which could impact the use of
services supplied by Precision and Precision’s ability to respond
to such conditions.
Readers are cautioned that the forgoing list of
risk factors is not exhaustive. Additional information on these and
other factors that could affect our business, operations or
financial results are included in reports on file with applicable
securities regulatory authorities, including but not limited to
Precision’s Annual Information Form for the year ended December 31,
2017, which may be accessed on Precision’s SEDAR profile at
www.sedar.com or under Precision’s EDGAR profile at www.sec.gov.
The forward-looking information and statements contained in this
news release are made as of the date hereof and Precision
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, except as required by
law.
About PrecisionPrecision 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 Super Series drilling rigs supported by an
industry leading technology platform that offers the most
innovative drilling solutions to deliver efficient, predictable and
repeatable results through service differentiation. Precision also
offers directional drilling services, well service and snubbing
rigs, camps and rental equipment all 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”.
For further information, please contact:
Carey Ford, CFASenior Vice President and Chief
Financial Officer713.435.6111 Ashley Connolly, CFAManager, Investor
Relations403.716.4725 Precision Drilling Corporation800, 525 - 8th
Avenue S.W.Calgary, Alberta, Canada T2P 1G1Website:
www.precisiondrilling.com
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