Precision Drilling Trust Q3 Profit Declines 13%

10/22/2009 1:10 PM ET

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(RTTNews) - Contract drilling service provider Precision Drilling Trust (PDS: News , PD_U.TO) said Thursday its third quarter profit declined 13% over last year, hurt by higher finance charges, and a weak global economy that lead to low energy commodity prices.

The Calgary, Canada-based company reported net earnings of C$72 million for the third quarter, down 13% from C$82 million in the prior year quarter. Earnings per unit plunged 59% to C$0.25 from C$0.61 in the previous year quarter.

Result for the latest quarter was negatively affected by a C$27 million increase in finance charges, partially offset by a C$63 million foreign exchange gain or C$0.19 per unit. Net earnings per unit were impacted by the 119% increase in units outstanding in the one-year period ending September 30, 2009.

Third quarter revenue declined 11% to C$253 million from C$285.6 million in the third quarter of 2008, due to the impact of global economic conditions and low commodity prices that led to a sharp reduction in drilling and servicing of oil and natural gas wells.

On a sequential basis, third quarter revenue increased 21% over the second quarter, helped by higher rig activity due to seasonality in Canada, demand for services on oil wells and early indications that drilling for natural gas may have bottomed in the second quarter.

Precision marketed an average U.S. fleet of 160 drilling rigs during the quarter, compared to a fleet of 24 drilling rigs last year.

Revenue from Contract Drilling Services division improved 2.0% to C$216.4 million, while revenue in the Canadian based Completion and Production Services segment slipped 49.5% to C$38.7 million over the third quarter of 2008.

Operating expenses for the third quarter eased to C$143.1 million from C$154.3 million in the prior year quarter.

For the nine-month period of 2009, Precision posted net earnings of C$187 million or C$0.75 per unit, compared to C$210 million or C$1.56 per unit in the previous year period.

Revenue for the period increased 18.8% to C$911.4 million from C$766.8 million in the prior year period.

Precision said, "The first three quarters of 2009 continued to reflect a weak global economy and resulting low energy commodity prices. While the economy has begun to show signs of stabilization and oil pricing has recovered somewhat, there remains considerable demand uncertainty for both oil and natural gas and this has triggered very low underlying customer demand for oilfield services."