CALGARY, Alberta, July 5, 2019 – Shares of Precision Drilling Corporation (NYSE: PDS) declined -0.53% to $1.86. The stock traded total volume of 474.388K shares lower than the average volume of 1.05M shares.
Precision Drilling Corp. (PDS) reported first-quarter net income of $18.80M, after reporting a loss in the same period a year earlier.
Summary for the three months ended March 31, 2019:
- Revenue this quarter was $434.0M which is 8% higher than the first quarter of 2018. The increase in revenue is mainly the result of higher activity and average day rates in our U.S. contract drilling business, offset by lower Canadian drilling activity. Contrast with the first quarter of 2018, our activity for the quarter, as measured by drilling rig utilization days increased by 23% in the U.S. while Canada reduced by 33% and international activity remained consistent. Revenue from our Contract Drilling Services and Completion and Production Services segments increased 8% and 12%, respectively.
- Adjusted EBITDA for the quarter was $108.0M, a boost of $10.0M from the previous year. Our Adjusted EBITDA as a percentage of revenue was 25% this quarter, contrast with 24% in the comparative quarter of 2018. Adjusted EBITDA this quarter was positively influenced by higher activity and day rates in the U.S., changes to the recognition of lease-related expenses under IFRS 16 and lower share-based incentive compensation expense offset by lower Canadian drilling activity and restructuring costs of $6.0M regarding severance costs as we continued to align our cost structure to reflect reduced Canadian activity levels. With the adoption of IFRS 16, lease-related charges of $3.0M in the first quarter of 2019 were recognized through finance charges and depreciation and amortization expense. Historically, these charges were reflected in operating and general and administrative expense. Total share-based incentive compensation expense for the quarter was $9.0M contrast with $10.0M in the first quarter of 2018.
- Operating earnings this quarter were $62.0M contrast with $10.0M in the first quarter of 2018. Operating earnings this quarter were positively influenced by the gain on asset disposals and impairment reversal from the disposition of our Mexico drilling equipment and changes to the recognition of lease-related expenses under IFRS 16 partially offset by restructuring costs.
- General and administrative expenses this quarter were $31.0M, $2.0M higher than in 2018. The higher general and administrative costs in 2019 were because of the weakening of the Canadian dollar on our U.S. dollar denominated costs.
- Net finance charges were $31.0M, a decrease of $1.0M contrast with the first quarter of 2018, mainly because of a reduction in interest expense related to the debt stepped down in 2018 and 2019, offset by the impact of the weakening of the Canadian dollar on our U.S. dollar denominated interest and $1.0M of lease accretion charges resulting from the adoption of IFRS 16 on January 1, 2019.
- We realized revenue from international contract drilling of US$36.0M in the first quarter of 2019, in-line with the prior year period. Average revenue per utilization day in our international contract drilling business was US$49,940 consistent with the comparable prior year quarter. During the quarter, we signed three-year contract renewals for two rigs in Saudi Arabia, one-year extensions for two Kuwait rigs and sold our Mexico-based drilling assets for proceeds of US$48.0M resulting in a gain on sale of US$24.0M and a US$4.0M impairment reversal.
- Directional drilling services realized revenue of $10.0M in the first quarter of 2019 contrast with $9.0M in the prior year period.
- Funds offered by operations in the first quarter of 2019 were $96.0M, a decrease of $8.0M from the prior year comparative quarter of $104.0M. The decrease was mainly the result of the timing of $20.0M of cash interest payments as we did not have a first quarter interest payment on our senior notes due 2026 in 2018, partially offset by improved operating results.
- Capital expenditures were $71.0M in the first quarter, a boost of $41.0M over the same period in 2018. Capital spending for the quarter included $66.0M for upgrade and expansion capital, mainly related to our sixth new-build rig for Kuwait and a U.S. new-build rig under long-term contract, and $5.0M for the maintenance of existing assets, infrastructure spending and intangibles.
PDS has the market capitalization of $546.43M and its EPS growth ratio for the past five years was -28.50%. The return on assets ratio of the Company was -6.70% while its return on investment ratio stands at -5.00%. Price to sales ratio was 0.45 while 45.90% of the stock was owned by institutional investors.