TORONTO (miningweekly.com) – A marked decline in business activity during the quarter ended March 31 has pushed North American oil and gas industry services provider Precision Drilling’s earnings into negative territory, forcing it to suspend its dividend.
The Calgary, Alberta-based company on Monday reported that activity for the quarter, as measured by drilling rig utilisation days, decreased 36% in Canada, 60% in the US and 33% internationally, when compared with the first quarter of 2015.
This translated to a net loss of $20-million, or a net loss per diluted share of $0.07, compared with net earnings of $24-million, or $0.08 a diluted share, in the comparable quarter a year earlier.
Revenue for the quarter was $302-million, down 41% year-on-year, mainly owing to lower drilling activity in the US, Canada and internationally, Precision advised. Revenue from its contract drilling services and completion and production services segments also decreased over the comparative prior-year period by 39% and 57%, respectively.
“The sharp drop in commodity prices early in the quarter led to a muted seasonal increase in Canada and continued activity reductions in the US. For an unprecedented second consecutive year, first quarter Canadian industry activity, typically the busiest quarter of the year, recorded a decline from the fourth quarter of the prior year.
“We also experienced five rig contract cancellations demonstrating the challenges facing our customers. Precision has recorded a total of nine contract cancellations since the beginning of this downturn cycle,” stated Precision president and CEO Kevin Neveu.
As at March 31, Precision’s restricted payments basket was negative and it was not able to make dividend payments until such time as the basket once again became positive, the company advised.