This news release contains “forward-looking information and
statements” within the meaning of applicable securities laws. For a
full disclosure of the forward-looking information and statements
and the risks to which they are subject, see the “Cautionary
Statement Regarding Forward-Looking Information and Statements”
later in this news release. This news release contains references
to Adjusted EBITDA, Covenant EBITDA, Operating Earnings (Loss),
Funds Provided by (Used in) Operations and Working Capital. These
terms do not have standardized meanings prescribed under
International Financial Reporting Standards (IFRS) and may not be
comparable to similar measures used by other companies, see
“Non-GAAP Measures” later in this news release.
Precision Drilling announces 2021 first quarter
financial results:
- Revenue of $236
million was a decrease of 38% compared with the first quarter of
2020.
- Net loss of $36
million or $2.70 per share compared to net loss of $5 million or
$0.38 per share in 2020.
- Earnings before
income taxes, gain on repurchase of unsecured senior notes, finance
charges, foreign exchange, gain on asset disposals and depreciation
and amortization (Adjusted EBITDA, see “NON-GAAP MEASURES”) of $55
million was 47% lower than the first quarter of 2020.
- Generated cash and
funds provided by operations (see “NON-GAAP MEASURES”) of $15
million and $43 million, respectively.
- First quarter
ending cash balance was $78 million.
- Reduced our Senior
Credit Facility balance by $49 million and established a $20
million Canadian Real Estate Credit Facility.
- First quarter
capital expenditures were $8 million.
- Repurchased and
cancelled 155,168 common shares for $4 million.
- Recognized the
Canadian government’s Canada Emergency Wage Subsidy
(CEWS) program assistance of $9 million.
- Increased U.S. rig
activation costs contributed to higher average operating costs as a
result of accelerated rig deployments during the quarter.
- Incurred $11
million of share-based compensation expense due to our increased
share price and a $2 million charge relating to the
reclassification of certain share-based compensation plans.
Precision’s President and CEO Kevin Neveu
stated:
“I am pleased with Precision’s response to the
rebounding North American drilling market during the first quarter
of 2021. Our current active U.S. rig count sits at 40 rigs, a
milestone achieved several weeks earlier than previously
anticipated and represents a 40% increase since the beginning of
the year. In Canada, which is now experiencing the seasonal
break-up slowdown, we are operating 20 rigs, an increase of 100%
from this time last year. During the first quarter, Precision added
eight new Alpha customers and increased paid days from
AlphaAutomation by 27% from the fourth quarter, demonstrating
increased market penetration for our Alpha digital technologies.
Additionally, we fully commercialized 10 AlphaApps and achieved a
similar increase in market penetration with that offering.”
“Precision’s international business continues to
generate stable cash flow and we are encouraged with early
pre-tendering exercises now underway in the region. It is beginning
to appear that rig reactivations may track the relaxation of oil
export limits. We remain confident in our ability to reactivate our
three idled ultra-high spec rigs in Kuwait. We will also continue
to explore opportunities to activate our other idle rigs in the
region.”
“Our Well Servicing business has experienced a
sharp uptick in customer demand and we anticipate the Canadian
Federal government’s well abandonment program will continue to
provide additional opportunities for the well service industry
through the remainder of the year and in 2022. Approximately 15% of
our first quarter activity related to well abandonments.”
“During the quarter, Precision generated $55
million in Adjusted EBITDA and $15 million in cash from operations,
largely driven by improving industry activity levels, our strong
market share and customer adoption of Precision’s Alpha
technologies. We have reduced debt levels by $51 million year to
date, despite the temporary seasonal working capital build in the
first quarter and expect the benefit of a working capital release
in the second quarter. I am confident that the steps we have taken
to reduce our fixed costs will continue to maximize the free cash
flow generating capabilities of Precision. We remain tightly
focused on meeting or exceeding our debt reduction goals for the
year along with our other stated priorities.”
“Precision’s ESG-related initiatives produced
encouraging results during the quarter, most notably our efforts to
progress emission-reduction alternatives for our customers. This
includes formalizing partnerships with green energy providers to
expand our offering of hybrid battery energy storage systems,
bi-fuel systems and natural gas rig power systems. We are also
piloting a GHG monitoring system, which will provide our customers
with real-time insights to establish performance baselines and
drive continued improvement through the entire operation. These
initiatives are well complimented by our modern, digitally
controlled and highly efficient Super Series rig fleet combined
with our industry-leading Alpha digital portfolio. We remain
committed to minimizing the environmental impact from our
operations while continuing to demonstrate the leading Social and
Governance practices for which Precision is well known.”
“Above all, Precision remains focused on the
safety of our employees on our rigs, operating centers and
corporate offices as we continue to execute our High Performance,
High Value strategy during this pandemic. Precision employees have
successfully confronted many associated challenges over the past 12
months and I am excited about the opportunities for our people as
the recovery continues to take shape,” concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING
INFORMATION
Financial Highlights
(Stated in
thousands of Canadian dollars, except per share amounts) |
For the three months ended March 31, |
|
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue |
|
236,473 |
|
|
|
379,484 |
|
|
|
(37.7 |
) |
Adjusted EBITDA(1) |
|
54,539 |
|
|
|
101,904 |
|
|
|
(46.5 |
) |
Operating earnings
(loss)(1) |
|
(15,415 |
) |
|
|
22,599 |
|
|
|
(168.2 |
) |
Net loss |
|
(36,106 |
) |
|
|
(5,277 |
) |
|
|
584.2 |
|
Cash provided by
operations |
|
15,422 |
|
|
|
74,953 |
|
|
|
(79.4 |
) |
Funds provided by
operations(1) |
|
43,430 |
|
|
|
81,317 |
|
|
|
(46.6 |
) |
Capital spending: |
|
|
|
|
|
|
|
|
|
|
|
Expansion and upgrade |
|
3,437 |
|
|
|
1,653 |
|
|
|
107.9 |
|
Maintenance and infrastructure |
|
4,999 |
|
|
|
9,832 |
|
|
|
(49.2 |
) |
Intangibles |
|
- |
|
|
|
57 |
|
|
|
(100.0 |
) |
Proceeds on sale |
|
(3,324 |
) |
|
|
(5,690 |
) |
|
|
(41.6 |
) |
Net capital spending |
|
5,112 |
|
|
|
5,852 |
|
|
|
(12.6 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
(2.70 |
) |
|
|
(0.38 |
) |
|
|
611.8 |
|
Diluted |
|
(2.70 |
) |
|
|
(0.38 |
) |
|
|
611.8 |
|
(1) See “NON-GAAP
MEASURES.”
Operating Highlights
|
For the three months ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
Contract drilling rig fleet |
|
227 |
|
|
|
227 |
|
|
|
- |
|
Drilling rig utilization
days: |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
2,951 |
|
|
|
4,984 |
|
|
|
(40.8 |
) |
Canada |
|
3,818 |
|
|
|
5,769 |
|
|
|
(33.8 |
) |
International |
|
540 |
|
|
|
728 |
|
|
|
(25.8 |
) |
Revenue per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
U.S.(1) (US$) |
|
22,133 |
|
|
|
23,878 |
|
|
|
(7.3 |
) |
Canada (Cdn$) |
|
21,131 |
|
|
|
21,444 |
|
|
|
(1.5 |
) |
International (US$) |
|
52,744 |
|
|
|
54,294 |
|
|
|
(2.9 |
) |
Operating cost per utilization
day: |
|
|
|
|
|
|
|
|
|
|
|
U.S. (US$) |
|
15,106 |
|
|
|
14,534 |
|
|
|
3.9 |
|
Canada (Cdn$) |
|
13,025 |
|
|
|
14,239 |
|
|
|
(8.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Service rig fleet |
|
123 |
|
|
|
123 |
|
|
|
- |
|
Service
rig operating hours |
|
34,903 |
|
|
|
34,365 |
|
|
|
1.6 |
|
(1) Includes revenue from
idle but contracted rig days.
Financial Position
(Stated in thousands of Canadian dollars, except ratios) |
March 31, 2021 |
|
|
December 31, 2020 |
|
|
Working capital(1) |
|
161,632 |
|
|
|
175,423 |
|
|
Cash |
|
77,831 |
|
|
|
108,772 |
|
|
Long-term debt |
|
1,189,880 |
|
|
|
1,236,210 |
|
|
Total long-term financial
liabilities |
|
1,252,203 |
|
|
|
1,304,162 |
|
|
Total assets |
|
2,795,596 |
|
|
|
2,898,878 |
|
|
Long-term debt to long-term debt plus equity ratio |
|
0.47 |
|
|
|
0.47 |
|
|
(1) See “NON-GAAP
MEASURES.”
Summary for the three months ended March 31,
2021:
- Revenue this quarter was $236
million, 38% lower than the first quarter of 2020 and was primarily
the result of lower contract drilling activity and day rates.
Drilling rig utilization days, decreased by 41% in the U.S., 34% in
Canada and 26% internationally, compared to the first quarter of
2020.
- Adjusted EBITDA (see “NON-GAAP
MEASURES”) for the quarter was $55 million, $47 million lower than
the previous year. Our Adjusted EBITDA as a percentage of revenue
was 23% this quarter, compared with 27% in the comparative quarter.
Adjusted EBITDA in the quarter was negatively impacted by lower
activity and higher share-based compensation expense, partially
offset by CEWS program assistance. Our increased share-based
compensation charges in the quarter were attributable to our
increased share price and reclassification of certain Performance
Share Unit (PSU) share-based compensation plans,
resulting in $2 million of incremental share-based compensation
expense for the quarter. See discussion on share-based incentive
compensation under “Other Items” later in this release for
additional details.
- Operating loss (see “NON-GAAP
MEASURES”) this quarter was $15 million compared with operating
earnings of $23 million in the first quarter of 2020.
- General and administrative expenses
this quarter were $21 million, $2 million higher than in 2020. Our
higher general and administrative costs in 2021 were primarily due
to increased share-based compensation charges, partially offset by
CEWS program assistance of $1 million. Excluding share-based
compensation and CEWS program assistance, our general and
administrative expenses decreased by 36% as compared with the first
quarter of 2020.
- Net finance charges were $22
million, a decrease of $5 million compared with the first quarter
of 2020, primarily due to reduced interest expense related to
retired debt.
- Revenue per utilization day in the
U.S. decreased in the first quarter of 2021 to US$22,133 from
US$23,878 in the prior year quarter. The decrease was the result of
lower fleet average day rates and revenue from idle but contracted
rigs, partially offset by higher turnkey activity. Operating costs
on a per day basis increased to US$15,106 in the first quarter of
2021 compared with US$14,534 in 2020. The increase was mainly due
to higher turnkey activity and reactivation expenses incurred on
additional rig deployments. On a sequential basis, revenue per
utilization day, excluding revenue from turnkey drilling and idle
but contracted rigs, decreased by US$354 due to lower fleet average
day rates, partially offset by higher operating cost recoveries,
while operating costs per day increased by US$687 due to higher
reactivation costs and labor-related expenses.
- In Canada, average revenue per
utilization day for contract drilling rigs was $21,131 compared
with $21,444 in the first quarter of 2020. The lower average
revenue per utilization day in the first quarter of 2021 was
primarily due to our rig mix. Average operating costs per
utilization day for drilling rigs in Canada decreased to $13,025
compared with the prior year quarter of $14,239. The decrease was
mainly due to the impact of the CEWS program assistance, cost
reduction initiatives and rig mix.
- During the quarter, we recognized
CEWS program assistance of $9 million, of which $8 million and $1
million were presented as offsets to our operating and general and
administrative costs, respectively.
- We realized revenue from
international contract drilling of US$28 million in the first
quarter of 2021, as compared to US$40 million in the prior year
period. The lower revenue in the current quarter was primarily due
to lower activity as our average active rig count decreased by two.
Average revenue per utilization day decreased 3% to US$52,744 from
the comparable prior year quarter, primarily due to changes in
service and rig mix.
- Cash and funds provided by
operations (see “NON-GAAP MEASURES”) in the first quarter of 2021
were $15 million and $43 million, respectively, compared to $75
million and $81 million in the prior year comparative period.
- Capital expenditures were $8
million, a decrease of $3 million from the prior year quarter.
Capital spending included $3 million for upgrade and expansion
capital and $5 million for the maintenance of existing assets,
infrastructure spending and intangibles.
- During the first quarter of 2021,
we repurchased and cancelled 155,168 common shares for $4 million
pursuant to our Normal Course Issuer Bid.
STRATEGY
Precision’s strategic priorities for 2021 are as
follows:
- Grow
revenue and market share through our digital leadership
position – In the first quarter of 2021, Precision exited
with 40 AC Super Triple Alpha-Rigs equipped with our
AlphaAutomation platform. During the quarter, we commercialized 10
additional AlphaApps, bringing the total count to 16 with several
more in development. In the first quarter alone, AlphaApp days
reached over 1,200, which compares to approximately 2,300 for the
full year 2020. This increase was largely driven by operational
performance, additional revenue generating days and uptake on new
customers utilizing the full suite of Alpha technologies. During
the quarter, Precision added eight new AlphaAutomation customers
and increased paid AlphaAutomation days, AlphaApp days and
AlphaAnalytics days quarter-over-quarter by 27%, 40% and 15%,
respectively.
- Demonstrate
operational leverage to generate free cash flow and reduce
debt – In the first quarter of 2021, Precision generated
$15 million of cash provided by operations (see “NON-GAAP
MEASURES”) and $3 million of cash proceeds from the divestiture of
non-core assets. Using cash on hand and cash generated, we reduced
our debt levels by $29 million as of March 31, 2021 and another $22
million subsequently, achieving total year to date debt reduction
of $51 million. Precision exited the quarter with a cash balance of
$78 million and US$36 million drawn on our US$500 million Senior
Credit Facility. Precision also established a $20 million Canadian
Real Estate Credit Facility, extending debt maturities while
providing flexibility to reduce interest expenses and maintaining
strong liquidity.
- Deliver
leading ESG (environmental, social and governance) performance to
strengthen customer and stakeholder positioning – In the
first quarter of 2021, Precision initiated the formation of
partnerships with green solution providers to expand our offering
of energy storage systems, bi-fuel and natural gas generators. We
are piloting the launch of a rig-based GHG (greenhouse gas)
monitoring system and are in the deployment phase of a plug and
play mobile natural gas generator and energy storage system for
existing electricity-powered drilling rigs with a major
customer.
OUTLOOK
The oilfield services industry outlook and
customer sentiment has improved in recent months, largely due to
vaccine announcements, reopening of economies and steadily
increasing commodity prices. Although longer-term visibility
remains limited, improved fundamentals from recovering global oil
demand should further stabilize commodity prices and result in
customers continuing to increase activity levels throughout the
year. In this environment, our customers are expected to remain
focused on capital discipline and maximizing operational
efficiencies. We anticipate these industry dynamics will accelerate
the industry’s transition toward service providers with the highest
performing assets and competitive digital technology offerings.
Pursuit of predictable and repeatable results will further drive
field application of drilling automation processes to create
additional cost efficiencies and performance value for
customers.
Precision continues to closely monitor
announcements of available government financial support and
economic stimulus programs. We remain encouraged by the Government
of Canada’s $1.7 billion well site abandonment and rehabilitation
program, which will support industry activity levels and provide
thousands of jobs throughout western Canada. The program will run
through the end of 2022 with government funds provided in stages.
As the use of service rigs is an integral part of the well
abandonment process, our well servicing business is positioned to
capture these opportunities as a result of our scale, operational
performance and strong safety record. During the fourth quarter, we
saw a continued rise in the number of approved abandonment
applications and further distribution of program funding to
oilfield service providers. Our abandonment service activity
continued to increase in the first quarter of 2021 compared with
the fourth quarter of 2020 and we expect further increases through
the end of the well site abandonment and rehabilitation program in
2022.
During the second quarter of 2020, the
Government of Canada introduced the CEWS program to subsidize a
portion of employee wages for Canadian employers whose businesses
have been adversely affected by COVID-19. The program is intended
to help employers re-hire previously laid off workers, prevent
further job losses and better position Canadian businesses to
resume normal operations. For the three months ended March 31,
2021, we recognized $9 million in CEWS program assistance,
presented as offsets to operating and general and administrative
expenses of $8 million and $1 million, respectively. The CEWS
program has benefitted both Precision and our employees as it has
allowed us to retain a higher employment level for Canadian
positions within our organization. We remain highly supportive of
this effective government program.
Contracts
Year to date in 2021 we have entered into 14
term contracts. The following chart outlines the average number of
drilling rigs under contract by quarter as of April 21, 2021. For
those quarters ending after March 31, 2021, this chart represents
the minimum number of long-term contracts from which we will earn
revenue. We expect the actual number of contracted rigs to vary in
future periods as we sign additional contracts and certain
customers elect to pay contract cancellation fees.
|
Average for the quarter ended 2020 |
|
Average for the quarter ended 2021 |
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
Average rigs under term contract as of April 21, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
41 |
|
|
|
32 |
|
|
|
26 |
|
|
|
24 |
|
|
21 |
|
|
|
24 |
|
|
|
17 |
|
|
|
13 |
|
Canada |
|
5 |
|
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
International |
|
8 |
|
|
|
8 |
|
|
|
6 |
|
|
|
6 |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
Total |
|
54 |
|
|
|
44 |
|
|
|
35 |
|
|
|
34 |
|
|
33 |
|
|
|
36 |
|
|
|
29 |
|
|
|
25 |
|
The following chart outlines the average number
of drilling rigs that we had under contract for 2020 and the
average number of rigs we have under contract as of April 21,
2021.
|
|
Average for theyear ended |
|
|
|
|
|
2020 |
|
|
2021 |
|
|
|
Average rigs under term contract as of April 21, 2021: |
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
31 |
|
|
|
19 |
|
|
|
Canada |
|
|
4 |
|
|
|
6 |
|
|
|
International |
|
|
7 |
|
|
|
6 |
|
|
|
Total |
|
|
42 |
|
|
|
31 |
|
|
|
In Canada, term contracted rigs normally
generate 250 utilization days per year because of the seasonal
nature of well site access. In most regions in the U.S. and
internationally, term contracts normally generate 365 utilization
days per year.
Drilling Activity
The following chart outlines the average number
of drilling rigs that we had working or moving by quarter for the
periods noted.
|
Average for the quarter ended 2020 |
|
Average for the quarter ended 2021 |
|
|
Mar. 31 |
|
|
June 30 |
|
|
Sept. 30 |
|
|
Dec. 31 |
|
|
Mar. 31 |
|
Average Precision active rig count: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
55 |
|
|
|
30 |
|
|
|
21 |
|
|
|
26 |
|
|
|
33 |
|
Canada |
|
63 |
|
|
|
9 |
|
|
|
18 |
|
|
|
28 |
|
|
|
42 |
|
International |
|
8 |
|
|
|
8 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
Total |
|
126 |
|
|
|
47 |
|
|
|
45 |
|
|
|
60 |
|
|
|
81 |
|
According to industry sources, as of April 21,
2021, the U.S. active land drilling rig count is down 17% from the
same point last year while the Canadian active land drilling rig
count is up 87%. To date in 2021, approximately 86% of the U.S.
industry’s active rigs and 52% of the Canadian industry’s active
rigs were drilling for oil targets, compared with 85% for the U.S.
and 61% for Canada at the same time last year.
Capital Spending
Capital spending in 2021 is expected to be $54
million and includes $38 million for sustaining, infrastructure and
intangibles and $16 million for upgrade and expansion. We expect
that the $54 million will be split $50 million in the Contract
Drilling Services segment, $3 million in the Completion and
Production Services segment and $1 million to the Corporate
segment. At March 31, 2021, Precision had capital commitments of
$109 million with payments expected through to 2023.
SEGMENTED FINANCIAL RESULTS
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
204,819 |
|
|
|
346,549 |
|
|
|
(40.9 |
) |
Completion and Production Services |
|
32,544 |
|
|
|
33,663 |
|
|
|
(3.3 |
) |
Inter-segment eliminations |
|
(890 |
) |
|
|
(728 |
) |
|
|
22.3 |
|
|
|
236,473 |
|
|
|
379,484 |
|
|
|
(37.7 |
) |
Adjusted EBITDA:(1) |
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Services |
|
60,031 |
|
|
|
110,733 |
|
|
|
(45.8 |
) |
Completion and Production Services |
|
7,802 |
|
|
|
3,235 |
|
|
|
141.2 |
|
Corporate and Other |
|
(13,294 |
) |
|
|
(12,064 |
) |
|
|
10.2 |
|
|
|
54,539 |
|
|
|
101,904 |
|
|
|
(46.5 |
) |
(1) See “NON-GAAP MEASURES.”
SEGMENT REVIEW OF CONTRACT DRILLING
SERVICES
(Stated in
thousands of Canadian dollars, except where noted) |
For the three months ended March 31, |
|
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue |
|
204,819 |
|
|
|
346,549 |
|
|
|
(40.9 |
) |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
138,121 |
|
|
|
222,329 |
|
|
|
(37.9 |
) |
General and administrative |
|
6,667 |
|
|
|
8,770 |
|
|
|
(24.0 |
) |
Restructuring |
|
- |
|
|
|
4,717 |
|
|
n/m |
|
Adjusted EBITDA(1) |
|
60,031 |
|
|
|
110,733 |
|
|
|
(45.8 |
) |
Depreciation |
|
65,232 |
|
|
|
75,724 |
|
|
|
(13.9 |
) |
Gain on asset disposals |
|
(1,725 |
) |
|
|
(2,842 |
) |
|
|
(39.3 |
) |
Operating earnings (loss)(1) |
|
(3,476 |
) |
|
|
37,851 |
|
|
|
(109.2 |
) |
Operating earnings (loss)(1) as a percentage of revenue |
|
(1.7 |
)% |
|
|
10.9 |
% |
|
|
|
|
(1) See “NON-GAAP MEASURES.”
United
States onshore drilling statistics:(1) |
2021 |
|
|
2020 |
|
|
Precision |
|
|
Industry(2) |
|
|
Precision |
|
|
Industry(2) |
|
Average number of active land rigs for quarters ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
33 |
|
|
|
378 |
|
|
|
55 |
|
|
|
764 |
|
(1) United States lower 48
operations only.(2) Baker Hughes rig counts.
Canadian onshore drilling statistics:(1) |
2021 |
|
|
2020 |
|
|
Precision |
|
|
Industry(2) |
|
|
Precision |
|
|
Industry(2) |
|
Average number of active land rigs for quarters ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
42 |
|
|
|
145 |
|
|
|
63 |
|
|
|
196 |
|
(1) Canadian operations
only.(2) Baker Hughes rig counts.
SEGMENT REVIEW OF COMPLETION AND
PRODUCTION SERVICES
(Stated in
thousands of Canadian dollars, except where noted) |
For the three months ended March 31, |
|
2021 |
|
|
2020 |
|
|
% Change |
|
Revenue |
|
32,544 |
|
|
|
33,663 |
|
|
|
(3.3 |
) |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
23,390 |
|
|
|
26,626 |
|
|
|
(12.2 |
) |
General and administrative |
|
1,352 |
|
|
|
1,479 |
|
|
|
(8.6 |
) |
Restructuring |
|
- |
|
|
|
2,323 |
|
|
n/m |
|
Adjusted EBITDA(1) |
|
7,802 |
|
|
|
3,235 |
|
|
|
141.2 |
|
Depreciation |
|
4,001 |
|
|
|
4,283 |
|
|
|
(6.6 |
) |
Gain on asset disposals |
|
(243 |
) |
|
|
(739 |
) |
|
|
(67.1 |
) |
Operating earnings (loss)(1) |
|
4,044 |
|
|
|
(309 |
) |
|
|
(1,408.7 |
) |
Operating earnings (loss)(1) as a percentage of revenue |
|
12.4 |
% |
|
|
(0.9 |
)% |
|
|
|
|
Well servicing statistics: |
|
|
|
|
|
|
|
|
|
|
|
Number of service rigs (end of period) |
|
123 |
|
|
|
123 |
|
|
|
- |
|
Service rig operating hours |
|
34,903 |
|
|
|
34,365 |
|
|
|
1.6 |
|
Service rig operating hour utilization |
|
32 |
% |
|
|
31 |
% |
|
|
|
|
(1) See “NON-GAAP MEASURES.”
SEGMENT REVIEW OF CORPORATE AND
OTHER
Our Corporate and Other segment provides support
functions to our operating segments. The Corporate and Other
segment had negative Adjusted EBITDA (see “NON-GAAP MEASURES”) of
$13 million as compared with $12 million in the first quarter of
2020. Our Adjusted EBITDA was negatively impacted by higher
share-based compensation costs as a result of our increased share
price and the reclassification of certain share-based compensation
plans, partially offset by CEWS program assistance of $1 million.
During the first quarter of 2020, we incurred restructuring charges
of $3 million to better align our cost structure with reduced
activity.
OTHER ITEMS
Share-based Incentive Compensation
Plans
We have several cash and equity-settled
share-based incentive plans for non-management directors, officers,
and other eligible employees. Our accounting policies for each
share-based incentive plan can be found in our 2020 Annual
Report.
A summary of amounts expensed under these plans
during the reporting periods are as follows:
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
Cash settled share-based incentive plans |
|
9,868 |
|
|
|
(6,393 |
) |
Equity settled share-based
incentive plans: |
|
|
|
|
|
|
|
Executive PSU |
|
773 |
|
|
|
2,735 |
|
Stock option plan |
|
131 |
|
|
|
386 |
|
Total share-based incentive compensation plan expense
(recovery) |
|
10,772 |
|
|
|
(3,272 |
) |
|
|
|
|
|
|
|
|
Allocated: |
|
|
|
|
|
|
|
Operating |
|
2,264 |
|
|
|
(973 |
) |
General and Administrative |
|
8,508 |
|
|
|
(2,299 |
) |
|
|
10,772 |
|
|
|
(3,272 |
) |
Cash settled share-based compensation expense
increased by $16 million in the current quarter primarily due to
our increasing share price and reclassification of Executive PSUs
as a cash settled share-based incentive plan. Conversely, our
equity settled share-based compensation expense for the first
quarter of 2021 decreased by $2 million from the Executive PSU
reclassification.
Finance Charges
Net finance charges were $22 million, a decrease
of $5 million compared with the first quarter of 2020, primarily
due to reduced interest expense related to retired debt.
Interest charges on our U.S. denominated
long-term debt in the first quarter of 2021 were US$16 million ($20
million) as compared with US$19 million ($26 million) in 2020.
Income Tax
Income tax recovery for the quarter was $2
million, consistent with 2020. As compared with the first quarter
of 2020, we had a lower income tax recovery as a percentage of loss
before income taxes as we did not recognize deferred tax assets on
certain Canadian and international operating losses.
LIQUIDITY AND CAPITAL
RESOURCES
Liquidity
Amount |
|
Availability |
|
Used for |
|
Maturity |
Senior credit facility (secured) |
|
|
|
|
|
|
US$500 million (extendible, revolving term credit facility
with US$300 million accordion feature) |
|
US$36 million drawn and US$32 million in outstanding letters of
credit |
|
General corporate purposes |
|
November 21, 2023 |
Real estate credit facilities (secured) |
|
|
|
|
|
|
US$10 million |
|
Fully drawn |
|
General corporate purposes |
|
November 19, 2025 |
$20 million |
|
Fully drawn |
|
General corporate purposes |
|
March 16, 2026 |
Operating facilities (secured) |
|
|
|
|
|
|
$40 million |
|
Undrawn, except $7 million in outstanding letters of
credit |
|
Letters of credit and general corporate purposes |
|
|
US$15 million |
|
Undrawn |
|
Short-term working capital requirements |
|
|
Demand letter of credit facility (secured) |
|
|
|
|
|
|
US$30 million |
|
Undrawn, except US$2 million in outstanding letters of
credit |
|
Letters of credit |
|
|
Unsecured senior notes (unsecured) |
|
|
|
|
|
|
US$286 million – 7.75% |
|
Fully drawn |
|
Debt redemption and repurchases |
|
December 15, 2023 |
US$263 million – 5.25% |
|
Fully drawn |
|
Capital expenditures and general corporate purposes |
|
November 15, 2024 |
US$348 million – 7.125% |
|
Fully drawn |
|
Debt redemption and repurchases |
|
January 15, 2026 |
At March 31, 2021, we had $1,205 million
outstanding under our Senior Credit Facility, Real Estate Credit
Facilities and unsecured senior notes as compared with $1,250
million at December 31, 2020. To provide additional liquidity
during the quarter, we established a $20 million Canadian Real
Estate Credit Facility secured by real properties in Alberta,
Canada.
The current blended cash interest cost of our
debt is approximately 6.6%.
Covenants
Following is a listing of applicable financial
covenants and their calculations for our Senior Credit Facility and
Real Estate Credit Facilities:
|
Covenant |
|
At March 31, 2021 |
|
Senior Credit Facility |
|
|
|
|
|
Consolidated senior debt to consolidated covenant EBITDA(1) |
< 2.50 |
|
|
0.30 |
|
Consolidated covenant EBITDA to consolidated interest expense |
> 1.25 |
|
|
2.14 |
|
Real Estate Credit
Facilities |
|
|
|
|
|
Consolidated covenant EBITDA to consolidated interest expense |
> 1.25 |
|
|
2.14 |
|
(1) For purposes of calculating the leverage ratio consolidated
senior debt only includes secured indebtedness.
At March 31, 2021, we were in compliance with
the covenants of our Senior Credit Facility and Real Estate Credit
Facilities.
Average shares outstanding
The following table reconciles the weighted
average shares outstanding used in computing basic and diluted net
loss per share:
|
For the three months ended March 31, |
|
(Stated in thousands) |
2021 |
|
|
2020 |
|
Weighted average shares outstanding – basic |
|
13,349 |
|
|
|
13,771 |
|
Effect
of stock options and other equity compensation plans |
|
— |
|
|
|
— |
|
Weighted average shares outstanding – diluted |
|
13,349 |
|
|
|
13,771 |
|
QUARTERLY FINANCIAL SUMMARY
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2020 |
|
|
2021 |
|
Quarters ended |
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
Revenue |
|
|
189,759 |
|
|
|
164,822 |
|
|
|
201,688 |
|
|
|
236,473 |
|
Adjusted EBITDA(1) |
|
|
58,465 |
|
|
|
47,771 |
|
|
|
55,263 |
|
|
|
54,539 |
|
Net loss |
|
|
(48,867 |
) |
|
|
(28,476 |
) |
|
|
(37,518 |
) |
|
|
(36,106 |
) |
Net loss per basic and diluted
share |
|
|
(3.56 |
) |
|
|
(2.08 |
) |
|
|
(2.74 |
) |
|
|
(2.70 |
) |
Funds provided by
operations(1) |
|
|
26,639 |
|
|
|
27,489 |
|
|
|
35,282 |
|
|
|
43,430 |
|
Cash
provided by operations |
|
|
104,478 |
|
|
|
41,950 |
|
|
|
4,737 |
|
|
|
15,422 |
|
(Stated in thousands of Canadian dollars, except per share
amounts) |
|
2019 |
|
|
2020 |
|
Quarters ended |
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
Revenue |
|
|
359,424 |
|
|
|
375,552 |
|
|
|
372,301 |
|
|
|
379,484 |
|
Adjusted EBITDA(1) |
|
|
81,037 |
|
|
|
97,895 |
|
|
|
105,006 |
|
|
|
101,904 |
|
Net loss |
|
|
(13,801 |
) |
|
|
(3,534 |
) |
|
|
(1,061 |
) |
|
|
(5,277 |
) |
Net loss per basic and diluted
share |
|
|
(0.93 |
) |
|
|
(0.23 |
) |
|
|
(0.08 |
) |
|
|
(0.38 |
) |
Funds provided by
operations(1) |
|
|
40,950 |
|
|
|
79,930 |
|
|
|
75,779 |
|
|
|
81,317 |
|
Cash
provided by operations |
|
|
106,035 |
|
|
|
66,556 |
|
|
|
74,981 |
|
|
|
74,953 |
|
(1) See “NON-GAAP
MEASURES.”
IMPACT OF COVID-19
In March 2020, the COVID-19 outbreak was
declared a pandemic by the World Health Organization. Governments
worldwide, including those countries in which Precision operates,
have enacted emergency measures to combat the spread of the virus.
These measures, which include the implementation of lockdowns,
travel bans, quarantine periods and social distancing, have caused
a material disruption to businesses globally resulting in an
economic slowdown and decreased demand for oil. Governments and
central banks have reacted with significant monetary and fiscal
interventions designed to stabilize economic conditions; however,
the success of these interventions is not yet determinable. The
situation remains dynamic and the ultimate duration and magnitude
of the impact on the economy and the financial effect on us is not
known at this time.
Financial Impacts
The current challenging economic climate may
have significant adverse impacts on Precision including, but not
limited to, substantial reductions in revenue and cash flows,
increased risk of non-collection of accounts receivable and future
impairments of property, plant and equipment and intangible
assets.
Our estimates and judgements made in the
preparation of our financial statements are increasingly difficult
and subject to a higher degree of measurement uncertainty during
this volatile period.
At March 31, 2021, we reviewed each
cash-generating unit (CGU) and did not identify any indications of
impairment. Accordingly, we did not test our CGUs for
impairment.
Operational impacts
During the pandemic, the oil and natural gas
extractive services industry has been classified as an “essential
service” and Precision’s operations, including all field
operations, technical support centres and administration groups,
have remained open. The vertical integration of our operations has
ensured minimal supply chain constraints and service
disruptions.
To manage the additional safety risks presented
by COVID-19, we implemented a comprehensive infectious disease plan
and added safety, sanitization and physical distancing procedures.
Precision’s procedures are in accordance with recommendations from
the World Health Organization, Center for Disease Control and
various federal, state and provincial government health
authorities.
Liquidity
Despite the challenges posed by COVID-19, we
have maintained a strong liquidity position. We exited the quarter
with a cash balance of $78 million and $595 million of available
borrowing capacity under our secured credit facilities, providing
us with $673 million of total liquidity as compared with $661
million at December 31, 2020. We expect that cash provided by
operations, cash on hand and our sources of financing, including
our Senior Credit Facility, will be sufficient to meet our debt
obligations and fund committed and future capital expenditures.
NON-GAAP MEASURES
In this release we reference non-GAAP (Generally
Accepted Accounting Principles) measures. Adjusted EBITDA, Covenant
EBITDA, Operating Earnings (Loss), Funds Provided by (Used in)
Operations and Working Capital are terms used by us to assess
performance as we believe they provide useful supplemental
information to investors. These terms do not have standardized
meanings prescribed under International Financial Reporting
Standards (IFRS) and may not be comparable to similar measures used
by other companies.
Adjusted EBITDA
We believe that Adjusted EBITDA (earnings before
income taxes, gain on repurchase of unsecured senior notes, finance
charges, foreign exchange, gain on assets disposals and
depreciation and amortization), as reported in the Interim
Consolidated Statement of Net Loss, is a useful measure, because it
gives an indication of the results from our principal business
activities prior to consideration of how our activities are
financed and the impact of foreign exchange, taxation and
depreciation and amortization charges.
Covenant EBITDA
Covenant EBITDA, as defined in our Senior Credit
Facility agreement, is used in determining the Corporation’s
compliance with its covenants. Covenant EBITDA differs from
Adjusted EBITDA by the exclusion of bad debt expense, restructuring
costs, certain foreign exchange amounts and the deduction of cash
lease payments incurred after December 31, 2018.
Operating Earnings (Loss)
We believe that operating earnings (loss) is a
useful measure because it provides an indication of the results of
our principal business activities before consideration of how those
activities are financed and the impact of foreign exchange and
taxation. Operating earnings is calculated as follows:
|
For the three months ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
2021 |
|
|
2020 |
|
Revenue |
|
236,473 |
|
|
|
379,484 |
|
Expenses: |
|
|
|
|
|
|
|
Operating |
|
160,621 |
|
|
|
248,227 |
|
General and administrative |
|
21,313 |
|
|
|
19,535 |
|
Restructuring |
|
— |
|
|
|
9,818 |
|
Depreciation and
amortization |
|
72,013 |
|
|
|
82,914 |
|
Gain on
asset disposals |
|
(2,059 |
) |
|
|
(3,609 |
) |
Operating earnings (loss) |
|
(15,415 |
) |
|
|
22,599 |
|
Foreign exchange |
|
(64 |
) |
|
|
2,691 |
|
Finance charges |
|
22,446 |
|
|
|
27,580 |
|
Gain on
repurchase of unsecured notes |
|
— |
|
|
|
(850 |
) |
Loss before income taxes |
|
(37,797 |
) |
|
|
(6,822 |
) |
Funds Provided By (Used In)
Operations
We believe that funds provided by (used in)
operations, as reported in the Interim Consolidated Statements of
Cash Flow, is a useful measure because it provides an indication of
the funds our principal business activities generate prior to
consideration of working capital, which is primarily made up of
highly liquid balances.
Working Capital
We define working capital as current assets less
current liabilities as reported on the Interim Consolidated
Statement of Financial Position.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements contained in this release,
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 strategic priorities for
2021;
- our capital expenditure plans for
2021;
- anticipated activity levels in
2021;
- anticipated demand for our drilling
rigs;
- the average number of term
contracts in place for 2021;
- anticipated cash savings and
liquidity;
- customer adoption of Alpha
technologies;
- potential commercial opportunities
and rig contract renewals; and
- our future debt reduction
plans.
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 success of our response to the
COVID-19 global pandemic;
- 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 level of oil
and natural gas exploration and development activities;
- fluctuations in the demand for
contract drilling, directional drilling, well servicing and
ancillary oilfield services;
- our customers’ inability to obtain
adequate credit or financing to support their drilling and
production activity;
- the success of vaccinations for
COVID-19 worldwide;
- changes in drilling and well
servicing technology, which could reduce demand for certain rigs or
put us at a competitive advantage;
- shortages, delays and interruptions
in the delivery of equipment supplies and other key inputs;
- liquidity of the capital markets to
fund customer drilling programs;
- availability of cash flow, debt and
equity sources to fund our capital and operating requirements, as
needed;
- the impact of weather and seasonal
conditions on operations and facilities;
- competitive operating risks
inherent in contract drilling, directional drilling, well servicing
and ancillary oilfield services;
- ability to improve our rig
technology to improve drilling efficiency;
- general economic, market or
business conditions;
- the availability of qualified
personnel and management;
- a decline in our safety performance
which could result in lower demand for our services;
- changes in laws or regulations,
including 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,
2020, 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
report 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.
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(Stated in thousands of Canadian dollars) |
|
March 31, 2021 |
|
|
December 31, 2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
77,831 |
|
|
$ |
108,772 |
|
Accounts receivable |
|
|
220,878 |
|
|
|
207,209 |
|
Inventory |
|
|
25,605 |
|
|
|
26,282 |
|
Total current assets |
|
|
324,314 |
|
|
|
342,263 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
1,265 |
|
|
|
1,098 |
|
Right-of-use assets |
|
|
53,122 |
|
|
|
55,168 |
|
Property, plant and equipment |
|
|
2,390,395 |
|
|
|
2,472,683 |
|
Intangibles |
|
|
26,500 |
|
|
|
27,666 |
|
Total non-current assets |
|
|
2,471,282 |
|
|
|
2,556,615 |
|
Total assets |
|
$ |
2,795,596 |
|
|
$ |
2,898,878 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
145,128 |
|
|
$ |
150,957 |
|
Income taxes payable |
|
|
4,181 |
|
|
|
3,702 |
|
Current portion of lease obligations |
|
|
11,155 |
|
|
|
11,285 |
|
Current portion of long-term debt |
|
|
2,218 |
|
|
|
896 |
|
Total current liabilities |
|
|
162,682 |
|
|
|
166,840 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
7,747 |
|
|
|
11,507 |
|
Provisions and other |
|
|
7,465 |
|
|
|
7,563 |
|
Lease obligations |
|
|
47,111 |
|
|
|
48,882 |
|
Long-term debt |
|
|
1,189,880 |
|
|
|
1,236,210 |
|
Deferred tax liabilities |
|
|
18,371 |
|
|
|
21,236 |
|
Total non-current liabilities |
|
|
1,270,574 |
|
|
|
1,325,398 |
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Shareholders’ capital |
|
|
2,281,444 |
|
|
|
2,285,738 |
|
Contributed surplus |
|
|
73,819 |
|
|
|
72,915 |
|
Deficit |
|
|
(1,125,700 |
) |
|
|
(1,089,594 |
) |
Accumulated other comprehensive income |
|
|
132,777 |
|
|
|
137,581 |
|
Total shareholders’ equity |
|
|
1,362,340 |
|
|
|
1,406,640 |
|
Total liabilities and shareholders’ equity |
|
$ |
2,795,596 |
|
|
$ |
2,898,878 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF NET LOSS (UNAUDITED)
(Stated in
thousands of Canadian dollars, except per share amounts) |
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
236,473 |
|
|
$ |
379,484 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating |
|
|
160,621 |
|
|
|
248,227 |
|
General and administrative |
|
|
21,313 |
|
|
|
19,535 |
|
Restructuring |
|
|
— |
|
|
|
9,818 |
|
Earnings before income taxes, gain on repurchase of unsecured
senior notes, finance charges, foreign exchange, gain on asset
disposals and depreciation and amortization |
|
|
54,539 |
|
|
|
101,904 |
|
Depreciation and
amortization |
|
|
72,013 |
|
|
|
82,914 |
|
Gain on asset disposals |
|
|
(2,059 |
) |
|
|
(3,609 |
) |
Foreign exchange |
|
|
(64 |
) |
|
|
2,691 |
|
Finance charges |
|
|
22,446 |
|
|
|
27,580 |
|
Gain on
repurchase of unsecured senior notes |
|
|
— |
|
|
|
(850 |
) |
Loss before income taxes |
|
|
(37,797 |
) |
|
|
(6,822 |
) |
Income taxes: |
|
|
|
|
|
|
|
|
Current |
|
|
784 |
|
|
|
1,059 |
|
Deferred |
|
|
(2,475 |
) |
|
|
(2,604 |
) |
|
|
|
(1,691 |
) |
|
|
(1,545 |
) |
Net loss |
|
$ |
(36,106 |
) |
|
$ |
(5,277 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.70 |
) |
|
$ |
(0.38 |
) |
Diluted |
|
$ |
(2.70 |
) |
|
$ |
(0.38 |
) |
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
|
|
Three Months Ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2021 |
|
|
2020 |
|
Net loss |
|
$ |
(36,106 |
) |
|
$ |
(5,277 |
) |
Unrealized gain (loss) on
translation of assets and liabilities of operations denominated in
foreign currency |
|
|
(20,998 |
) |
|
|
157,008 |
|
Foreign exchange gain (loss)
on net investment hedge with U.S. denominated debt |
|
|
15,909 |
|
|
|
(118,156 |
) |
Tax
benefit related to net investment hedge of long-term debt |
|
|
285 |
|
|
|
— |
|
Comprehensive income (loss) |
|
$ |
(40,910 |
) |
|
$ |
33,575 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Three Months Ended March 31, |
|
(Stated
in thousands of Canadian dollars) |
|
2021 |
|
|
2020 |
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(36,106 |
) |
|
$ |
(5,277 |
) |
Adjustments for: |
|
|
|
|
|
|
|
|
Long-term compensation plans |
|
|
7,148 |
|
|
|
(703 |
) |
Depreciation and amortization |
|
|
72,013 |
|
|
|
82,914 |
|
Gain on asset disposals |
|
|
(2,059 |
) |
|
|
(3,609 |
) |
Foreign exchange |
|
|
558 |
|
|
|
2,872 |
|
Finance charges |
|
|
22,446 |
|
|
|
27,580 |
|
Income taxes |
|
|
(1,691 |
) |
|
|
(1,545 |
) |
Other |
|
|
3 |
|
|
|
60 |
|
Gain on repurchase of unsecured senior notes |
|
|
— |
|
|
|
(850 |
) |
Income taxes paid |
|
|
(161 |
) |
|
|
(820 |
) |
Interest paid |
|
|
(18,766 |
) |
|
|
(19,495 |
) |
Interest received |
|
|
45 |
|
|
|
190 |
|
Funds provided by operations |
|
|
43,430 |
|
|
|
81,317 |
|
Changes
in non-cash working capital balances |
|
|
(28,008 |
) |
|
|
(6,364 |
) |
|
|
|
15,422 |
|
|
|
74,953 |
|
Investments: |
|
|
|
|
|
|
|
|
Purchase of property, plant
and equipment |
|
|
(8,436 |
) |
|
|
(11,485 |
) |
Purchase of intangibles |
|
|
— |
|
|
|
(57 |
) |
Proceeds on sale of property,
plant and equipment |
|
|
3,324 |
|
|
|
5,690 |
|
Changes
in non-cash working capital balances |
|
|
(4,802 |
) |
|
|
(3,526 |
) |
|
|
|
(9,914 |
) |
|
|
(9,378 |
) |
Financing: |
|
|
|
|
|
|
|
|
Issuance of long-term
debt |
|
|
20,000 |
|
|
|
— |
|
Repayments of long-term
debt |
|
|
(49,425 |
) |
|
|
(40,554 |
) |
Repurchase of share
capital |
|
|
(4,294 |
) |
|
|
(5,244 |
) |
Debt issuance costs |
|
|
(244 |
) |
|
|
— |
|
Debt amendment fees |
|
|
— |
|
|
|
(21 |
) |
Lease
payments |
|
|
(1,621 |
) |
|
|
(1,728 |
) |
|
|
|
(35,584 |
) |
|
|
(47,547 |
) |
Effect of exchange rate changes on cash |
|
|
(865 |
) |
|
|
4,273 |
|
Increase (decrease) in cash |
|
|
(30,941 |
) |
|
|
22,301 |
|
Cash,
beginning of period |
|
|
108,772 |
|
|
|
74,701 |
|
Cash, end of period |
|
$ |
77,831 |
|
|
$ |
97,002 |
|
CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome |
|
|
Deficit |
|
|
TotalEquity |
|
Balance at January 1, 2021 |
|
$ |
2,285,738 |
|
|
$ |
72,915 |
|
|
$ |
137,581 |
|
|
$ |
(1,089,594 |
) |
|
$ |
1,406,640 |
|
Net loss for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(36,106 |
) |
|
|
(36,106 |
) |
Other comprehensive loss for
the period |
|
|
— |
|
|
|
— |
|
|
|
(4,804 |
) |
|
|
— |
|
|
|
(4,804 |
) |
Share repurchases |
|
|
(4,294 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,294 |
) |
Share-based compensation
reclassification |
|
|
— |
|
|
|
(1,455 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,455 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
2,359 |
|
|
|
— |
|
|
|
— |
|
|
|
2,359 |
|
Balance at March 31, 2021 |
|
$ |
2,281,444 |
|
|
$ |
73,819 |
|
|
$ |
132,777 |
|
|
$ |
(1,125,700 |
) |
|
$ |
1,362,340 |
|
(Stated
in thousands of Canadian dollars) |
|
Shareholders’Capital |
|
|
ContributedSurplus |
|
|
AccumulatedOtherComprehensiveIncome |
|
|
Deficit |
|
|
TotalEquity |
|
Balance at January 1, 2020 |
|
$ |
2,296,378 |
|
|
$ |
66,255 |
|
|
$ |
134,255 |
|
|
$ |
(969,456 |
) |
|
$ |
1,527,432 |
|
Net loss for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,277 |
) |
|
|
(5,277 |
) |
Other comprehensive income for
the period |
|
|
— |
|
|
|
— |
|
|
|
38,852 |
|
|
|
— |
|
|
|
38,852 |
|
Share repurchases |
|
|
(5,244 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,244 |
) |
Share-based compensation
reclassification |
|
|
— |
|
|
|
(1,498 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,498 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
3,121 |
|
|
|
— |
|
|
|
— |
|
|
|
3,121 |
|
Balance at March 31, 2020 |
|
$ |
2,291,134 |
|
|
$ |
67,878 |
|
|
$ |
173,107 |
|
|
$ |
(974,733 |
) |
|
$ |
1,557,386 |
|
FIRST QUARTER 2021 EARNINGS CONFERENCE
CALL AND WEBCAST
Precision Drilling Corporation has scheduled a
conference call and webcast to begin promptly at 12:00 noon MT
(2:00 p.m. ET) on Thursday, April 22, 2021.
The conference call dial in numbers are
1-844-515-9176 or 614-999-9312.
A live webcast of the conference call will be
accessible on Precision’s website at www.precisiondrilling.com by
selecting “Investor Relations”, then “Webcasts &
Presentations.” Shortly after the live webcast, an archived version
will be available for approximately 60 days.
An archived version of the webcast will be
available for approximately 60 days. An archived recording of the
conference call will be available approximately one hour after the
completion of the call until April 26, 2021 by dialing 855-859-2056
or 404-537-3406, passcode 6870957.
About Precision
Precision is a leading provider of safe and
environmentally responsible High Performance, High Value services
to the energy industry, offering customers access to an extensive
fleet of Super Series drilling rigs. Precision has commercialized
an industry-leading digital technology portfolio known as “Alpha”
that utilizes advanced automation software and analytics to
generate efficient, predictable, and repeatable results for energy
customers. Additionally, Precision offers well service rigs, camps
and rental equipment and directional drilling services 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, Senior Vice President and Chief
Financial Officer713.435.6100
Dustin Honing, Director, Investor Relations and
Corporate Development403.716.4500
800, 525 - 8th Avenue S.W.Calgary, Alberta,
Canada T2P 1G1Website: www.precisiondrilling.com
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