Precision Drilling Announces 2023 Second Quarter Unaudited Financial Results

CALGARY, Alberta, July 27, 2023 (GLOBE NEWSWIRE) -- 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 certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending 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 “Financial Measures and Ratios” later in this news release.

Precision Drilling announces 2023 second quarter financial results:

• Revenue was $426 million compared with $326 million in the second quarter of 2022 as our drilling rigs continued to reprice at higher day rates, increasing 25% in Canada and 39% in the U.S. year over year.
• Achieved second quarter Adjusted EBITDA⁽¹⁾ of $142 million, significantly surpassing the $64 million reported in 2022. Adjusted EBITDA included idle but contracted rig revenue of US$5 million and share-based compensation of $3 million, compared with US$1 million and $5 million, respectively, in 2022.
• Net earnings were $27 million or $1.97 per share compared to a net loss of $25 million of $1.81 per share in 2022.
• We continued to deliver High Performance, High Value service, expanding daily operating margins⁽²⁾, maintaining strict cost control and scaling our Alpha™ digital technologies and EverGreen™ suite of environmental solutions across our Super Triple rig fleet, growing revenue from these offerings by over 60% from the second quarter of 2022.
• Revenue per utilization day increased to $33,535 in Canada and US$35,576 in the U.S., while daily operating margins were $12,203 in Canada and US$16,613 in the U.S.
• We strengthened our contract book, signing take-or-pay term contracts with several new customers including large U.S. independents and major oil and gas companies and increasing fourth quarter rigs under take-or-pay term contracts in the U.S. from 18 to 27 and in Canada from 15 to 25.
• Averaged 42 active rigs in Canada, an increase of 12% over the second quarter of 2022, and 51 rigs in the U.S., representing an 8% decline from the second quarter of 2022.
• Generated $213 million of cash from operations, repaid $178 million of debt, including all amounts drawn on our Senior Credit Facility and repurchased US$30 million of 2026 unsecured senior notes. Additionally, we returned $8 million to shareholders through share repurchases under our Normal Course Issuer Bid (NCIB).
• As at June 30, 2023, we have reduced total debt by $100 million since the beginning of the year and remain on track to meet our 2023 debt reduction target of at least $150 million. We remain committed to achieving a normalized Net Debt to Adjusted EBITDA⁽¹⁾ ratio of less than 1.0 times by the end of 2025.
• Ended the quarter with $23 million of cash and more than $575 million of available liquidity.
• Completion and Production Services generated revenue of $46 million and Adjusted EBITDA of $8 million, representing increases of 40% and 55%, respectively, from the second quarter of 2022.
• Internationally, we have six rigs currently active in the Middle East, increasing to eight in the third quarter. These eight contracts are expected to generate stable predictable cash flow that will stretch into 2028.
  _{(1) See “FINANCIAL MEASURES AND RATIOS.”
  (2) Revenue per utilization day less operating costs per utilization day.}

Precision’s President and CEO, Kevin Neveu, stated:

“We are pleased with our second quarter financial results, with revenue and Adjusted EBITDA of $426 million and $142 million, respectively, and generating $1.97 of net earnings on a per share basis. As a result of Precision’s strong operating cash flows combined with focused spending controls and efficient cash management, we delivered outstanding funds from operations. We have reduced our total debt by $100 million since the beginning of the year and are well on our way to achieving our 2023 debt reduction target while continuing to allocate capital to shareholders through share repurchases.

“Our Canadian business continues to improve with healthy spring break-up activity due to increasing year-round pad drilling in the Montney and Clearwater formations. With imminent additions to hydrocarbon pipeline takeaway capacity, the outlook is certainly encouraging. Our Canadian fleet is in high demand with 58 rigs running, including all of our Super Triples and pad capable Super Singles. We expect customer demand for our Super Triple and Super Single pad capable fleets will continue to exceed supply well into 2024.

“In the U.S. we currently have 43 active rigs and two rigs on paid standby. Firm oil prices are supporting an improved customer outlook as demand for our Super Triple rigs is increasing and demonstrated by securing contracts for several rig reactivations later this quarter and into 2024. We believe long-term natural gas fundamentals are robust, despite short-term uncertainty experienced this year, as several Gulf Coast LNG export trains are due to come on stream in late 2024 and 2025.

“In the Middle East, we currently have six rigs running and expect to have eight rigs active before the end of the third quarter. With two new rig activations this year, our international operations are expected to provide incremental, stable, and predictable cash flow in 2024.

“Our High Performance, High Value services and our Super Series fleet, coupled with our Alpha™ digital technologies and EverGreen™ suite of environmental solutions, continue to underpin Precision’s earnings power. While our industry is susceptible to commodity price volatility, short-term industry cyclicality does not distract us from our business model or annual priorities. This includes our cash flow and debt reduction targets, which we have consistently met or exceeded, independent of the business cycle, and will continue to do so.

“I am confident that by remaining focused on our strategic priorities and what we can control, Precision will deliver increased shareholder value,” concluded Mr. Neveu.

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

Operating Highlights