Precision Drilling reports profit for first time since 2019

Revenues jump on tight rig supply and 27% increase in North American drilling activity

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Precision Drilling Corp. announced net earnings of $31 million in the third quarter of the year, as customer demand helped the oilfield service company return to profitability for the first time since 2019.

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The Calgary-based company generated net earnings equivalent to $2.26 per share for the three months ended Sept. 30, compared with a net loss of $38 million in the third quarter of 2021, or $2.86 per share, the company said in a release Thursday.

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“I am very pleased to see Precision’s financial performance return to profitability as the recovery in customer demand continues to gain momentum and now spans all geographies and services we provide,” chief executive Kevin Neveu said in a statement.

“With strong demand for our services, tight rig supply and pricing momentum on leading-edge day rates, we expect fleet average day rates and operating margins to continue trending upward well into 2023.”

Precision reported revenue gains thanks to a 27 per cent increase in North American drilling activity over the third quarter of 2021.

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The company reported an average of 57 active drilling rigs in the U.S. during the third quarter, with 61 operating currently — a 20 per cent increase from the beginning of the year. In Canada, the company averaged 58 active rigs during the quarter, a 16 per cent increase over the same period last year.

Precision said it is focused on debt reduction while allocating 10 to 20 per cent of free cash flow toward share repurchases.

The company announced earlier this month that it had been awarded five-year drilling contracts in Kuwait and Saudi Arabia that will increase its active rig count in the region to eight rigs by the middle of 2023, representing $820 million in contracted revenue.

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