Precision Drilling Q2 loss surges as pandemic weakens demand for oil

Precision Drilling Q2 loss surges as pandemic weakens demand for oil

CALGARY — A sharp decline in North American oilfield activity in the second quarter meant more layoffs, contract terminations and parked drilling rigs, Precision Drilling Corp. reported Thursday.

The Calgary-based company reported a net loss of $48.9 million, compared with a loss of $13.8 million in the same period last year, as revenue fell by 47 per cent to $190 million amid a plunge in oil prices.

“This has been a very challenging time,” said CEO Kevin Neveu on a conference call.

“For most of March, April and May, all of our customer discussions centred on terminating contracts, idling rigs and working with customers to find ways to minimize their spending.”

It reported adjusted earnings of $58 million, compared with $81 million in the year-earlier period.

The number was bolstered by US$16 million from U.S. customers who didn’t actually use Precision’s rigs — half that amount was under ongoing take-or-pay contracts and the rest came from customers who paid a lump sum penalty to cancel their contracts.

Precision also declared revenue of $9 million under Canada’s wage subsidy program while confirming $6 million in severance and restructuring charges.

Neveu said the demand outlook for drilling services for the rest of the year remains “opaque,” adding he doesn’t expect much increase in Precision’s current working rig totals.

In the second quarter, the company had nine active rigs in Canada, down from 27 in the same period of 2019, and 30 in the U.S., down from 77.

Precision says deeper cost-cutting than was previously announced should lead to an additional $14 million in annualized savings this year.

It said total savings, capital expenditure reductions and the Canadian wage subsidy program will reduce 2020 cash outflows by up to $150 million, surpassing its $100-million previous target.

This report by The Canadian Press was first published July 23, 2020.

Companies in this story: (TSX:PD)

Dan Healing, The Canadian Press

Note to readers: This is a corrected story. An earlier version misstated the number of U.S. rigs in Q2 2019.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta children whose only symptom of COVID-19 is a runny nose or a sore throat will no longer require mandatory isolation, starting Monday.
477 new COVID-19 cases confirmed in Alberta on Thursday

Changes being made to the COVID-19 symptom list for school-age children

Alisha Bryan holds a handful of poppy sticks at the poppy laying ceremony on Oct. 28. (Alannah Page/Lacombe Express)
Remembrance Day will look a little different this year for Lacombe

The Lacombe Legion is taking COVID-19 precautions for people who want to pay their respects.

Chad Carlson (left) Jarita Carlson and their two children Milo Carlson (left) and Lennon Carlson are dressing up as Ghostbusters for Halloween. (Alannah Page/Lacombe Express)
Lacombe family passionate about Halloween and giving back to their community

COVID-19 has changed how the Carlson’s will celebrate Halloween this year

The Lacombe Legion volunteers laid poppies beside the graves of veterans on Oct. 28. (Alannah Page/Lacombe Express)
Lacombe Legion volunteers lay poppies for fallen veterans

Twenty volunteers showed up on Wednesday to pay their respects and help out

There were 410 COVID-19 cases recorded in Alberta Wednesday. (File photo by The Associated Press)
Alberta records 410 new COVID-19 cases Wednesday

Central zone dropped to 160 active cases

Royal Alexandra Hospital front-line workers walk a picket line after walking off the job in a wildcat strike in Edmonton, on Monday, October 26, 2020. THE CANADIAN PRESS/Jason Franson
Alberta labour board orders health-care staff who walked off the job to go back to work

Finance Minister Travis Toews said in a news release that he was pleased with the labour board’s decision

Pilots Ilona Carter and Jim Gray of iRecover Treatment Centres, in front of his company’s aircraft, based at Ponoka’s airport. (Perry Wilson/Submitted)
95-year-old Ilona Carter flies again

Takes to the skies over Ponoka

Children’s backpacks and shoes are seen at a daycare in Langley, B.C., on Tuesday May 29, 2018. Alberta Children’s Services Minister Rebecca Schulz says the province plans to bring in a new way of licensing and monitoring child-care facilities. THE CANADIAN PRESS/Darryl Dyck
Alberta proposes legislation to change rules on child-care spaces

Record-keeping, traditionally done on paper, would be allowed digitally

Prime Minister Justin Trudeau shakes hands with US Vice-President Joe Biden on Parliament Hill in Ottawa on Friday, December 9, 2016. THE CANADIAN PRESS/ Patrick Doyle
A Biden presidency could mean good news for Canadian environment policy: observers

Experts and observers say even a U.S. outside the Paris agreement may ultimately end up in the same place

People take a photo together during the opening night of Christmas Lights Across Canada, in Ottawa, on Wednesday, Dec. 4, 2019. The likelihood that most Canadians will enjoy a holly jolly Christmas season of gatherings, caroling and travel is unlikely, say public health experts who encourage those who revel in holiday traditions to accept more sacrifices ahead. THE CANADIAN PRESS/Justin Tang
Ho, ho, no: Experts advise preparing for a scaled-back COVID holiday season

Many of the holiday season’s highlights have already been scrapped or are unlikely to take place

Sen. Kim Pate is shown in Toronto in an October 15, 2013, file photo. The parliamentary budget office says a proposed law that would give judges discretion on whether to apply a lesser sentence for murder could save the federal government $8.3 million per year. THE CANADIAN PRESS/Colin Perkel
Judicial discretion for mandatory minimum sentences for murder would save $8.3M: PBO

The result would be fewer people in long-term custody at federal correctional institutions, experts say

Husky Energy logo is shown at the company’s annual meeting in Calgary on May 5, 2017. THE CANADIAN PRESS/Jeff McIntosh
Husky pipeline spills 900,000 litres of produced water in northwestern Alberta

The energy regulator says environmental contractors are at the site

A raccoon paid a visit to a Toronto Tim Hortons on Oct. 22, 2020. (shecallsmedrew/Twitter)
Who are you calling a trash panda? Raccoon takes a shift at Toronto Tim Hortons

Tim Hortons said animal control was called as soon they saw the surprise visitor

Most Read