Precision Drilling Q2 loss surges as pandemic weakens demand for oil

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.

Just Posted

The Government of Alberta identified 115 new COVID-19 cases Sunday, bringing the provincial total to 3,089.
(Black Press file photo)
Red Deer COVID cases continue to fall

114 cases in Red Deer, down one from Saturday

File Photo
Blackfalds RCMP seeking suspects in traffic collision

RCMP are asking the public for help identifing two suspects wanted for multiple offences

Maskwacis Pride crosswalk (Left to right): Montana First Nation Councillor Reggie Rabbit, Samson Cree Nation Councillor Louise Omeasoo, Samson Cree Nation Councillor Katherine Swampy, Samson Cree Nation Councillor Shannon Buffalo, Samson Cree Nation Chief Vern Saddleback.
Pride in Maskwacis

The 4th inaugural Maskwacis Pride crosswalk painting took place on Saturday June 12th, 2021

Alberta Premier Jason Kenney arrives at the 2021 budget in Edmonton on Thursday, Feb. 25, 2021.THE CANADIAN PRESS/Jason Franson
Alberta launches COVID vaccine lottery with million-dollar prizes to encourage uptake

The premier says the lottery will offer three prizes worth $1 million a piece, as well as other prizes

The City of Red Deer sits at 249 active cases of the virus, after hitting a peak of 565 active cases on Feb. 22. (Black Press file image)
Red Deer down to 119 active COVID-19 cases

Province identifies 179 new cases Saturday

People watch a car burn during a riot following game 7 of the NHL Stanley Cup final in downtown Vancouver, B.C., in this June 15, 2011 photo. THE CANADIAN PRESS/Geoff Howe
10 years ago: Where were you during the 2011 Vancouver Stanley Cup Riots?

Smashed-in storefronts, looting, garbage can fires and overturned cars some of the damage remembered today

A health-care worker holds up a sign signalling she needs more COVID-19 vaccines at the ‘hockey hub’ mass vaccination facility at the CAA Centre during the COVID-19 pandemic in Brampton, Ont., on Friday, June 4, 2021. This NHL-sized hockey rink is one of CanadaÕs largest vaccination centres. THE CANADIAN PRESS/Nathan Denette
‘Vaxxed to the max’: Feds launch Ask an Expert campaign to encourage COVID shots

Survey shows that confidence in vaccines has risen this spring

Children’s shoes and flowers are shown after being placed outside the Ontario legislature in Toronto on Monday, May 31, 2021. THE CANADIAN PRESS/Frank Gunn
Ontario commits $10 million to investigate burial sites at residential schools

Truth and Reconciliation Commission identified 12 locations of unmarked burial sites in Ontario

Two hundred and fifteen lights are placed on the lawn outside the Residential School in Kamloops, B.C., Saturday, June, 13, 2021. The remains of 215 children were discovered buried near the former Kamloops Indian Residential School earlier this month. THE CANADIAN PRESS/Jonathan Hayward
Days after Kamloops remains discovery, Tk’emlups families gather to unite, move ahead

‘We have to work together because this is going to be setting a precedent for the rest of the country’

In this Saturday, May 29, 2021, file photo, people crowd the Santa Monica Pier in Santa Monica, Calif. California, the first state in America to put in place a coronavirus lockdown, is now turning a page on the pandemic. Most of California’s coronavirus restrictions will disappear Tuesday, June 15, 2021. (AP Photo/Damian Dovarganes, File)
With COVID tamed, it’s a ‘grand reopening’ in California

No more state rules on social distancing, no more limits on capacity, no more mandatory masks

Montreal Canadiens goaltender Carey Price (31) is scored on by Vegas Golden Knights defenseman Alec Martinez, not pictured, during the second period in Game 1 of an NHL hockey Stanley Cup semifinal playoff series Monday, June 14, 2021, in Las Vegas. (AP Photo/John Locher)
Habs fall 4-1 to Vegas Golden Knights in Game 1 of NHL semifinal series

Match was Montreal’s first game outside of Canada in 2021

The Kamloops Indian Residential School is photographed using a drone in Kamloops, B.C., Monday, June, 14, 2021. The remains of 215 children were discovered buried near the former school earlier this month. THE CANADIAN PRESS/Jonathan Hayward
Communities grapple with what to do with former residential and day schools

Some tear them down as a tool to help healing, others repurpose them as tools for moving forward

RCMP Const. Shelby Patton is shown in this undated handout photo. RCMP say that Patton was hit by an allegedly stolen truck that he had pulled over on Saturday morning in Wolseley, east of Regina. THE CANADIAN PRESS/HO, RCMP
Pair charged in Saskatchewan Mountie’s death make first court appearance

Const. Shelby Patton was hit by an allegedly stolen truck that he had pulled over Saturday morning

David and Collet Stephan leave for a break during an appeal hearing in Calgary on Thursday, March 9, 2017. THE CANADIAN PRESS/Todd Korol
Appeal Court rejects stay for Alberta couple facing third trial in son’s death

Pair accused in their earlier trials of not seeking medical attention for their son sooner

Most Read