Tuesday, February 4, 2014

Precision Drilling: A Bright Future Awaits For This Canadian Driller

Precision Drilling’s (NYSE:PDS) growth has stalled since 2012 but the company appears to be on the verge of a turnaround, which is evident in the improving drilling rig revenues per utilization day and active rig count. More importantly, the business is in a good position to capitalize on favorable secular trends coming from LNG development at the west coast.

Calgary based Precision Drilling (PDS) is Canada's leading oilfield services firm which provides contract drilling, well servicing and strategic support services to its customers. The company was formed as a private drilling contractor in the early 1950s and has grown on the back of fleet expansion and acquisitions, most notably, the $2 billion acquisition of Grey Wolf Inc in 2008. The business owns a large fleet of horizontally capable drilling rigs.

Earlier in December, the Alberta Investment Management (AIM) Company, which owned 56 million shares of Precision Drilling, sold its entire stake in the Canadian driller in an overnight transaction. This came after the company announced disappointing quarterly results in late November. As a result, Precision Drilling's shares dropped by more than 9% on December 5. This was largely due to the overreaction by the shareholders as the company's future outlook is still bright.

Business Segments
Precision Drilling has two business segments; contract drilling services and completion services.
Under contract drilling, Precision Drilling operates its rigs and provides onshore well drilling services to E&P firms, mainly in Canada and the United States. Until the end of 2012, Precision Drilling had 321 land drilling rings, including 186 rigs in Canada, 127 in the United States, 5 in Mexico and 3 in Saudi Arabia. In a recent presentation held earlier in December, Precision Drilling's management pointed out that their onshore drilling fleet has now grown to 334 drilling rigs, including 206 …. Read full article at Seeking Alpha