Precision Drilling Q2 loss surges as pandemic weakens demand for oil

Precision Drilling Q2 loss surges as pandemic weakens demand for oil

CALGARY — A sharp decline in North American oilfield activity in the second quarter meant more layoffs, contract terminations and parked drilling rigs, Precision Drilling Corp. reported Thursday.

The Calgary-based company reported a net loss of $48.9 million, compared with a loss of $13.8 million in the same period last year, as revenue fell by 47 per cent to $190 million amid a plunge in oil prices.

“This has been a very challenging time,” said CEO Kevin Neveu on a conference call.

“For most of March, April and May, all of our customer discussions centred on terminating contracts, idling rigs and working with customers to find ways to minimize their spending.”

It reported adjusted earnings of $58 million, compared with $81 million in the year-earlier period.

The number was bolstered by US$16 million from U.S. customers who didn’t actually use Precision’s rigs — half that amount was under ongoing take-or-pay contracts and the rest came from customers who paid a lump sum penalty to cancel their contracts.

Precision also declared revenue of $9 million under Canada’s wage subsidy program while confirming $6 million in severance and restructuring charges.

Neveu said the demand outlook for drilling services for the rest of the year remains “opaque,” adding he doesn’t expect much increase in Precision’s current working rig totals.

In the second quarter, the company had nine active rigs in Canada, down from 27 in the same period of 2019, and 30 in the U.S., down from 77.

Precision says deeper cost-cutting than was previously announced should lead to an additional $14 million in annualized savings this year.

It said total savings, capital expenditure reductions and the Canadian wage subsidy program will reduce 2020 cash outflows by up to $150 million, surpassing its $100-million previous target.

This report by The Canadian Press was first published July 23, 2020.

Companies in this story: (TSX:PD)

Dan Healing, The Canadian Press

Note to readers: This is a corrected story. An earlier version misstated the number of U.S. rigs in Q2 2019.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Village of Halkirk investing in technology upgrades

The upgrades will be done in order for the municipality to safely secure resident information

PHOTO: Village of Halkirk Mayor Dale Kent presents two cheques to Castor District Housing Authority Manager Trudy Kilner

The cheques were presented as a matching grant by the Federation of Gas Co-ops to be given to a registered charity

76 new cases of COVID-19 reported Thursday

Active cases at 1,036, 10,713 recovered cases

County of Paintearth raising alarms over proposed oil and gas assessment changes

A change in the assessment model used for oil and gas will impact the tax revenue rural municipalities collect

COVID-19 tests urged for all teachers and school staff

121 new cases Wednesday, active cases up to 1,040

Charges likely in fatal attack at central Alberta medical clinic: RCMP

A vigil was held Monday night to mourn the victim

Wetaskiwin Regional Public Schools receive grant from Indigo Love of Reading Foundation.

WRPS has received $15,975 from the Indigo Love of Reading Foundation.

Three people drown at Crescent Falls

Rocky Mountain House RCMP say the incident occurred Tuesday

Feds seeking private consultant to design firearm buyback program

The ban covers some 1,500 models and variants of what the government considers assault-style weapons

Face masks for teachers can impact learning on young children, experts say

Face coverings, mandatory in most indoor public places across the province, can help limit the spread of COVID-19

New Tory leader must build a strong team in Commons and for the campaign: Scheer

Scheer marked his final day in the House of Commons today as leader of the Opposition

Man accused of killing Red Deer doctor says he does not remember attack

Appearing before a judge, Deng Mabiour, 54, rambled about being sick and needing a doctor

Deaths feared after train derails amid storms in Scotland

Stonehaven is on the line for passenger trains linking Aberdeen with the cities of Edinburgh and Glasgow

Man, 54, charged in connection with fatal attack of Red Deer doctor

Doctor was killed in his walk-in clinic on Monday

Most Read