UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For February 10, 2005
Commission File Number: 001-14534
PRECISION DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
4200, 150 - 6TH AVENUE S.W.
CALGARY, ALBERTA
CANADA T2P 3Y7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [_] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1). _______
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): _______
Note: Regulation S-T Rule 101(b)(7) only permits the submission in
paper of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
-------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRECISION DRILLING CORPORATION
Per: /s/ Jan M. Campbell
------------------------
Jan M. Campbell
Corporate Secretary
Date: February 10, 2005
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NEWS RELEASE
CALGARY, ALBERTA, CANADA - February 10, 2005
PRECISION DRILLING CORPORATION
ANNOUNCES RECORD ANNUAL EARNINGS
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Precision Drilling Corporation ("Precision" or the "Corporation") today reports
results for the year and quarter ended December 31, 2004. Diluted earnings per
share for the year amounted to a record $4.22, up 29% from $3.26 in 2003. Fourth
quarter earnings per share from continuing operations increased by 26% to $1.40
compared to $1.11 last year. Revenue increased by 22% in 2004 to $2,325 million
while net earnings increased by 37% to $247 million, demonstrating the operating
leverage associated with our business.
Sustained high crude oil and natural gas prices have generated a strong
environment for the oilfield services business both in Canada and
internationally. In addition, the acquisition of 31 internationally based
drilling rigs and of Reeves Oilfield Services Ltd. in the second quarter of 2004
contributed significantly to the year over year improvement in earnings.
Contract Drilling revenue of $377.7 million and operating earnings of $138.1
million increased by 30% and 39% respectively in the fourth quarter of 2004
compared to the same period of 2003. The international drilling operation has
performed above expectations and contributed revenue of $74.3 million in the
fourth quarter compared to $37.1 million in 2003.
The Canadian drilling and service rig operations saw activity levels increase 4%
and 13% respectively. The Canadian drilling rig fleet achieved 12,099 operating
days in the fourth quarter of 2004 and the service rig fleet generated 127,694
operating hours, with activity levels being supported by continued favourable
commodity prices and good weather conditions. Strong demand resulted in winter
pricing being maintained throughout the summer and allowed for rate increases to
be implemented for the 2004/2005 winter drilling season. Drilling revenue per
operating day increased by 8% and service revenue per hour increased by 14%.
Precision's international rig fleet numbered 48 at the end of 2004 compared to
19 at the end of 2003, with one rig sold and one rig relocated to Canada. The
Corporation has greatly enhanced its presence in the eastern hemisphere with 28
rigs located in the region. Demand for rigs, especially in the Middle East, is
on the rise and as a result recent contract awards have been for increased day
rates. Venezuela, where we have 11 rigs, is also starting to see improved
activity levels. Activity for the 10 rigs located in Mexico have been dampened
somewhat by Pemex budget restrictions, however Precision has recently been
awarded an extension of its integrated services contract that will maintain
utilization at approximately 70% into 2006. We will also be participating in the
bidding on drilling projects for other international operators in Mexico.
Energy Services revenue increased by $62.1 million or 34% in the fourth quarter
of 2004 compared to 2003. Operating earnings increased by $18.9 million over the
same period. The strengthening Canadian dollar resulted in foreign exchange
losses of $2.5 million in the current quarter compared to a gain of $0.2 million
in the fourth quarter of 2003.
The acquisition of Reeves Oilfield Services Ltd. in May accounted for half of
the fourth quarter year over year revenue increase. As well, revenue for
non-Reeves operations increased in all regions. Of particular note is the 123%
revenue increase in Asia/Pacific and the 70% revenue increase in Latin America.
In the Asia/Pacific region, we have seen growth in all our product lines in
India and Bangladesh and operations in Indonesia have returned to profitability.
The improvement in Latin America is due to a gradual increase in activity in
Venezuela as that country pushes to get production levels back to what they were
prior to the general strike. Revenue generated in the United States also
increased by 23% as a result of increased land drilling activity spurred by
sustained high commodity prices.
An important milestone was achieved in the Middle East market in the fourth
quarter with the completion of field trials and qualification to perform
logging-while-drilling and rotary steerable work in the region. We plan to
leverage this technological success and Precision's increased presence in the
region to expand Energy Services' business across all its product lines.
The Rental and Production segment saw a 14% increase in revenue and a 50%
increase in operating earnings in the fourth quarter of 2004 compared to 2003.
The plant maintenance business had a strong quarter with additional work coming
from unplanned refinery shutdowns and from extensions of projects at the
oilsands plants longer into the Christmas season than was usual. The rental
operation also saw increased revenue due to increased pricing on select product
lines as a result of continued strong demand for equipment.
As a result of the recent completion of a review of the useful lives of our
drilling rigs and related equipment, Precision will be changing the useful life
of its drilling rigs for purposes of determining depreciation expense to 5,000
days from the current 3,650 and of its drill string to 1,500 days from 1,100
days. This change in accounting estimate will be applied prospectively beginning
January 1, 2005.
Certain statements contained in this press release, including statements which
are related to rising demand for rigs, especially in the Middle East, improved
activity levels in Venezuela, our intention to expand Energy Services' business
in the Middle East and which may contain words such as "anticipate", "could",
"should", "expect", "believe", "will" and similar expressions and statements
relating to matters that are not historical facts are forward-looking
statements, including "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Such forward-looking statements involve known and unknown risks and
uncertainties which may cause the actual results, performance or achievements of
Precision to be materially different from any future results, performances or
achievements expressed or implied by such forward-looking statements. Such
factors include fluctuations in the market for oil and gas and related products
and services; competition; political and economic conditions in countries in
which Precision does business; the demand for services provided by Precision;
changes in laws and regulations, including environmental, to which Precision is
subject and other factors, which are described in further detail in Precision's
filings with the US Securities and Exchange Commission.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31 DECEMBER 31
CDN $000'S, EXCEPT PER SHARE AMOUNTS 2004 2003 2004 2003
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(UNAUDITED) (unaudited)
Revenue $ 679,487 $ 523,646 $ 2,325,216 $ 1,900,147
Expenses:
Operating 406,398 338,140 1,471,228 1,265,215
General and administrative 52,938 38,938 173,673 143,322
Depreciation and amortization 58,487 44,912 203,829 170,384
Research and engineering 11,480 11,577 48,759 42,411
Foreign exchange 1,473 (1,094) 3,274 (2,663)
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530,776 432,473 1,900,763 1,618,669
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Operating earnings 148,711 91,173 424,453 281,478
Interest 14,928 8,298 46,909 35,050
Gain on disposal of investments (2,325) (329) (4,899) (3,355)
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Earnings from continuing operations before income
taxes and non-controlling interest 136,108 83,204 382,443 249,783
Income taxes:
Current 24,102 19,677 100,256 57,029
Future 25,517 2,093 31,302 12,851
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49,619 21,770 131,558 69,880
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Earnings from continuing operations before
non-controlling interest 86,489 61,434 250,885 179,903
Non-controlling interest -- -- 1,298 --
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Earnings from continuing operations 86,489 61,434 249,587 179,903
Discontinued operations, net of tax 1,694 (8,476) (2,183) 571
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Net earnings 88,183 52,958 247,404 180,474
Retained earnings, beginning of period 953,500 741,321 794,279 613,805
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Retained earnings, end of period $ 1,041,683 $ 794,279 $ 1,041,683 $ 794,279
===========================================================================================================================
Earnings per share from continuing operations:
Basic $ 1.42 $ 1.12 $ 4.32 $ 3.31
Diluted $ 1.40 $ 1.11 $ 4.26 $ 3.25
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Earnings per share:
Basic $ 1.45 $ 0.97 $ 4.28 $ 3.32
Diluted $ 1.43 $ 0.95 $ 4.22 $ 3.26
===========================================================================================================================
Common shares outstanding (000's) 60,790 54,846 60,790 54,846
Weighted average shares outstanding (000's) 60,758 54,769 57,827 54,430
Diluted shares outstanding (000's) 61,676 55,578 58,605 55,299
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 December 31
CDN $ 000'S 2004 2003
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ASSETS
Current assets:
Cash and cash equivalents $ 122,012 $ 21,370
Accounts receivable 690,999 539,370
Inventory 114,352 95,210
Future income tax asset 8,711 1,524
Assets of discontinued operations -- 30,508
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936,074 687,982
Property, plant and equipment, net of accumulated depreciation 1,945,521 1,584,954
Intangibles, net of accumulated amortization 191,665 65,262
Goodwill 735,413 527,443
Other assets 9,116 8,932
Future income tax asset 32,984 28,699
Assets of discontinued operations -- 35,336
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$ 3,850,773 $ 2,938,608
==============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ -- $ 147,909
Accounts payable and accrued liabilities 340,372 258,803
Income taxes payable 31,103 7,136
Current portion of long-term debt 18 17,158
Future income tax liability 7,270 791
Liabilities of discontinued operations -- 7,191
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378,763 438,988
Long-term debt 718,870 399,422
Future income taxes 431,399 350,031
Future income taxes of discontinued operations -- 1,107
Non-controlling interest -- 3,771
Shareholders' equity:
Share capital 1,274,967 936,744
Contributed surplus 26,024 14,266
Cumulative translation adjustment (20,933) --
Retained earnings 1,041,683 794,279
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2,321,741 1,745,289
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$ 3,850,773 $ 2,938,608
==============================================================================================================
Common shares outstanding (000's) 60,790 54,846
Common share purchase options outstanding (000's) 3,348 3,393
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31 DECEMBER 31
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CDN $000's 2004 2003 2004 2003
(unaudited) (unaudited)
Cash provided by (used in):
Continuing operations:
Earnings from continuing operations $ 86,489 $ 61,434 $ 249,587 $ 179,903
Items not affecting cash:
Depreciation and amortization 58,487 44,912 203,829 170,384
Stock-based compensation 4,954 2,129 13,837 8,001
Gain on disposal of investments (2,325) (329) (4,899) (3,355)
Future income taxes 25,517 2,093 31,302 12,851
Non-controlling interest -- -- 1,298 --
Amortization of deferred financing costs 434 321 1,579 1,286
Unrealized foreign exchange gain on
long-term monetary items 1,194 (2,308) (1,555) (16,433)
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Funds provided by operations 174,750 108,252 494,978 352,637
Changes in non-cash working capital balances (39,304) (14,521) (50,178) (99,664)
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135,446 93,731 444,800 252,973
Discontinued operations:
Funds provided by (used in) discontinued operations $ 3,579 $ 400 $ 3,689 $ (309)
Changes in non-cash working capital balances
of discontinued operations -- 4,877 (447) 5,763
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3,579 5,277 3,242 5,454
Investments:
Business acquisitions (19,812) -- (679,814) (6,800)
Purchase of property, plant and equipment (89,614) (77,483) (282,224) (314,921)
Purchase of intangibles (6) (6) (320) (6)
Proceeds on sale of property, plant and equipment 5,323 7,777 29,940 24,423
Proceeds on disposal of investments 2,788 386 8,665 10,966
Proceeds on disposal of discontinued operations -- -- 49,299 67,274
Investments (90) (350) (90) (1,080)
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(101,411) (69,676) (874,544) (220,144)
Financing:
Increase in long-term debt -- 4,288 522,136 85,228
Repayment of long-term debt (3) -- (173,260) (145,657)
Deferred financing costs on long-term debt -- -- (5,612) --
Issuance of common shares on exercise of options 5,006 7,349 55,361 23,613
Issuance of common shares, net of cash (27) -- 276,428 --
Change in bank indebtedness -- (37,869) (147,909) 2,588
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4,976 (26,232) 527,144 (34,228)
Increase in cash and cash equivalents 42,590 3,100 100,642 4,055
Cash and cash equivalents, beginning of period 79,422 18,270 21,370 17,315
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Cash and cash equivalents, end of period $ 122,012 $ 21,370 $ 122,012 $ 21,370
==============================================================================================================================
SEGMENT INFORMATION
THREE MONTHS ENDED DECEMBER 31, 2004 Contract Energy Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
--------------------------------------------------------------------------------------------------------------------------------
Revenue $ 377,699 $ 246,424 $ 55,364 $ -- $ 679,487
Operating earnings 138,091 14,833 11,165 (15,378) 148,711
Research and engineering -- 11,480 -- -- 11,480
Depreciation and amortization 28,596 24,949 3,607 1,335 58,487
Total assets 1,920,893 1,627,572 179,521 122,787 3,850,773
Goodwill 350,941 355,770 28,702 -- 735,413
Capital expenditures* 36,106 43,190 5,590 4,734 89,620
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THREE MONTHS ENDED DECEMBER 31, 2003 Contract Energy Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
--------------------------------------------------------------------------------------------------------------------------------
Revenue $ 290,940 $ 184,294 $ 48,412 $ -- $ 523,646
Operating earnings 99,016 (4,020) 7,431 (11,254) 91,173
Research and engineering -- 11,577 -- -- 11,577
Depreciation and amortization 19,491 20,867 3,169 1,385 44,912
Total assets 1,423,036 1,287,458 166,300 61,814 2,938,608
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 36,240 28,939 5,695 6,615 77,489
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YEAR ENDED DECEMBER 31, 2004 Contract Energy Rental and Corporate
CDN $000's Drilling Services Production and Other Total
--------------------------------------------------------------------------------------------------------------------------------
Revenue $ 1,235,410 $ 874,314 $ 215,492 $ -- $ 2,325,216
Operating earnings 399,487 36,719 40,026 (51,779) 424,453
Research and engineering -- 48,759 -- -- 48,759
Depreciation and amortization 92,161 92,477 13,806 5,385 203,829
Total assets 1,920,893 1,627,572 179,521 122,787 3,850,773
Goodwill 350,941 355,770 28,702 -- 735,413
Capital expenditures* 110,192 136,091 17,201 19,060 282,544
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YEAR ENDED DECEMBER 31, 2003 Contract Energy Rental and Corporate
CDN $000's Drilling Services Production and Other Total
--------------------------------------------------------------------------------------------------------------------------------
Revenue $ 992,824 $ 696,599 $ 210,724 $ -- $ 1,900,147
Operating earnings 284,850 (3,847) 39,067 (38,592) 281,478
Research and engineering -- 42,411 -- -- 42,411
Depreciation and amortization 77,725 75,174 12,533 4,952 170,384
Total assets 1,423,036 1,287,458 166,300 61,814 2,938,608
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 99,034 177,756 15,158 22,979 314,927
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*excludes business acquisitions
CANADIAN DRILLING OPERATING STATISTICS
FOR THE YEARS ENDED DECEMBER 31,
2004 2003
---------------------------------------------------------------------
Market Market
Precision Industry* Share % Precision Industry* Share %
---------------------------------------------------------------------
Number of drilling rigs 229 700 32.7 225 660 34.1
Number of operating days (spud to release) 41,625 132,374 31.4 42,725 126,498 33.8
Wells drilled 7,525 21,793 34.5 8,451 20,694 40.8
Average days per well 5.5 6.1 5.1 6.1
Metres drilled (000's) 8,021 23,526 34.1 8,604 21,802 39.5
Average metres per day 193 178 201 172
Average metres per well 1,066 1,080 1,018 1,054
Rig utilization rate (%) 50.3 52.9 52.0 53.1
* Excludes non-CAODC rigs.
A conference call to review the year-end results has been scheduled for 12:00
noon MST on Thursday, February 10, 2005. The conference call dial-in number is
1-800-814-4857.
A live webcast will be accessible at www.precisiondrilling.com by selecting
Investor Relations.
Precision Drilling Corporation (TSX: PD and PD.U; NYSE: PDS) is a global
oilfield services company providing a broad range of drilling, production and
evaluation services with focus on fulfilling customer needs through
fit-for-purpose technologies for the maturing oilfields of the 21st century.
With corporate offices in Calgary, Alberta, Canada, corporate subsidiary offices
in Houston, Texas, and research facilities in the U.S. and Europe, Precision
employs more than 10,000 people conducting operations in more than 30 countries.
Precision is committed to providing efficient and safe services to create value
for our customers, our shareholders and our employees.
FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT
FINANCE AND CHIEF FINANCIAL OFFICER, TELEPHONE: (403) 716-4500, FAX: (403)
264-0251; WEBSITE: WWW.PRECISIONDRILLING.COM.