UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For October 30, 2003
Commission File Number: 001-14534
PRECISION DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
4200, 150 - 6TH AVENUE S.W.
CALGARY, ALBERTA
CANADA T2P 3Y7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [_] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1)._______
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):_______
Note: Regulation S-T Rule 101(b)(7) only permits the submission in
paper of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
-----
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRECISION DRILLING CORPORATION
Per: /s/ Jan M. Campbell
---------------------------------
Jan M. Campbell
Corporate Secretary
Date: October 30, 2003
Calgary, Alberta, Canada - October 30, 2003
PRECISION DRILLING CORPORATION ANNOUNCES
STRONG THIRD QUARTER RESULTS
HIGHLIGHTS
CDN $000'S, EXCEPT PER SHARE AMOUNTS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
% %
2003 2002 Change 2003 2002 Change
------------------------------------------------------------------------------------------------------------------------
FINANCIAL RESULTS
Revenue $468,097 $ 363,669 28.7 $1,424,331 $1,226,600 16.1
Operating earnings (1) 63,174 20,371 210.1 189,331 134,547 40.7
Earnings from continuing operations 37,772 10,459 261.1 116,022 76,927 50.8
Net earnings 37,772 12,246 208.4 133,531 82,402 62.0
Diluted earnings per share:
From continuing operations 0.68 0.19 257.9 2.10 1.41 48.9
After discontinued operations 0.68 0.22 209.1 2.42 1.51 60.3
Funds provided by continuing operations 93,260 22,872 307.7 244,720 146,870 66.6
------------------------------------------------------------------------------------------------------------------------
Precision Drilling Corporation ("Precision" or the "Corporation") today reports
earnings per share from continuing operations for the three months ended
September 30, 2003 of $0.68 compared to $0.19 in the same quarter of 2002.
Included in earnings from continuing operations are costs of $816 ($0.01 per
share) associated with business rationalization initiatives. For the nine month
period ended September 30, 2003, earnings per share from continuing operations
was $2.10 compared to $1.41 for the same period in 2002 while gains on disposal
of discontinued operations resulted in further earnings per share of $0.32 for a
total of $2.42 per share for the nine month period ended September 30, 2003.
Revenue of $468.1 million for the quarter increased by $104.4 million or 29%
over the same period in the prior year. The majority of this increase came from
the Corporation's Canadian operations. Activity levels in Canada were strong in
all of the Corporation's business segments. Revenue from the Canadian Contract
Drilling operation was up 53% while Technology Services Canadian operations
revenue was up by 44%.
Contract Drilling revenue increased by 47% in the third quarter compared to the
same quarter last year. For the nine month period, revenue has increased 21%
from the prior year.
In Canada, the drilling rig fleet achieved 10,848 operating days for a 52%
utilization in the quarter compared to 6,944 operating days and a 34%
utilization in the comparable quarter of the prior year. The increase in rig
operating days of 56% for the quarter and 33% for the nine-month
period follows overall industry activity. The activity levels for the third
quarter were up on the prior year due to near perfect weather in July and
August, improved commodity pricing resulting in higher industry activity and the
backlog of work created by unfavorable weather in the second quarter. Average
day rates increased as a result of increased demand and strong pricing on the
spot market. Day rates in Canada are expected to improve as anticipated activity
reaches near record levels. In the fourth quarter the Corporation will be adding
two Super Single Lights(TM), bringing the total rig fleet in Canada to 226.
The service rig fleet generated 110,447 operating hours in the third quarter, up
19% from the same quarter last year. Average hourly rates have increased 3% from
the third quarter of 2002. As at September 30, 2003 the Corporation was
operating 239 service rigs, down 3 from the same period in the prior year as two
units were deregistered and one unit was involved in an incident that has made
it inoperable. Activity levels in well servicing were up on the comparable
quarter last year due to ideal weather conditions, increased drilling activity
and strong commodity pricing, heavy oil in particular.
During the quarter the Corporation experienced an increase in international
drilling activity as the number of days increased over the same quarter in 2002
by 41% to 972 days. The increase in rig operating days was the result of
increased drilling activity in Latin America, as Venezuela recovers from the
effects of a general strike, and a one rig project in Asia Pacific. The
Corporation has entered into a second rig contract in Asia Pacific and is
mobilizing another rig to the Middle East. These rig deployments, together with
the increase in rigs working on the Mexico integrated services contract from 7
to 10, will bring the total drilling rigs working internationally to 19 and
should result in growth for international Contract Drilling.
In the quarter, revenue for Technology Services was 19% higher than the
comparable quarter of 2002. The most significant increase was realized in the
Canadian region where revenue increased $23.5 million (a 44% increase over 2002)
due to increased activity. Other areas with significant growth in revenue were
Mexico, with the expansion in growth outside of the integrated services
contract, and the Middle East, where the Corporation has been successful in
adding new contracts over the past 12 months. Revenue for the quarter was
contributed from Canada at 40% (2002 - 36%), US 24% (2002- 24%) and
International 36% (2002 - 40%).
Operating earnings as a percentage of revenue improved significantly from a loss
of 5% in the third quarter of 2002 to slightly better than break even.
Depreciation expense increased as a result of asset write downs, increased
capital assets and a gain on disposal of capital assets in 2002 of $4.1 million
compared to a gain on disposal in 2003 of $1.5 million. Total capital
expenditures in the Technology Services segment in the last twelve months have
been $216.6 million.
As noted in the second quarter, the business plan for Technology Services is
being reviewed. This process will be completed early in the fourth quarter and
will result in the identification of core and non core product lines. These
conclusions will guide future capital spending and divestiture decisions and
will form the basis for assessing the carrying value of the Corporation's
investment in Technology Services or components thereof.
The tool build for Technology Services continues and tool deployment proceeds on
a strategic basis. Future investment is being directed to increasing available
tool sizes and expanding concurrent job capability.
The Rental and Production segment experienced an increase in revenue of 5% over
the prior year to $48.9 million. The segment's rental division realized higher
revenues due to increased rental days and a modest increase in revenue per
rental day driven by activity levels in Canada. During the quarter the
Corporation combined its 3 separate rental operations to form one business unit
in order to improve upon customer convenience and streamline operations.
(1) NON-GAAP MEASURE
OPERATING EARNINGS IS NOT A RECOGNIZED MEASURE UNDER CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP). MANAGEMENT BELIEVES THAT IN ADDITION TO NET
EARNINGS, OPERATING EARNINGS IS A USEFUL SUPPLEMENTAL MEASURE AS IT PROVIDES AN
INDICATION OF THE RESULTS GENERATED BY THE CORPORATION'S PRINCIPAL BUSINESS
ACTIVITIES PRIOR TO CONSIDERATION OF HOW THOSE ACTIVITIES ARE FINANCED OR HOW
THE RESULTS ARE TAXED IN VARIOUS JURISDICTIONS. INVESTORS SHOULD BE CAUTIONED,
HOWEVER, THAT OPERATING EARNINGS SHOULD NOT BE CONSTRUED AS AN ALTERNATIVE TO
NET EARNINGS DETERMINED IN ACCORDANCE WITH GAAP AS AN INDICATOR OF PRECISION'S
PERFORMANCE. PRECISION'S METHOD OF CALCULATING OPERATING EARNINGS MAY DIFFER
FROM OTHER COMPANIES AND, ACCORDINGLY, OPERATING EARNINGS MAY NOT BE COMPARABLE
TO MEASURES USED BY OTHER COMPANIES.
CERTAIN STATEMENTS CONTAINED IN THIS PRESS RELEASE, INCLUDING STATEMENTS WHICH
ARE RELATED TO IMPROVEMENT IN DAY RATES IN CANADA, GROWTH IN INTERNATIONAL
CONTRACT DRILLING AND FUTURE INVESTMENTS AND DRILLING ACTIVITY AND WHICH MAY
CONTAIN WORDS SUCH AS "ANTICIPATE", "COULD", "SHOULD", "EXPECT", "BELIEVE",
"WILL" AND SIMILAR EXPRESSIONS AND STATEMENTS RELATING TO MATTERS THAT ARE NOT
HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES WHICH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF PRECISION TO BE MATERIALLY DIFFERENT
FROM ANY FUTURE RESULTS, PERFORMANCES OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE FLUCTUATIONS IN THE MARKET
FOR OIL AND GAS AND RELATED PRODUCTS AND SERVICES; COMPETITION; POLITICAL AND
ECONOMIC CONDITIONS IN COUNTRIES IN WHICH PRECISION DOES BUSINESS; THE DEMAND
FOR SERVICES PROVIDED BY PRECISION; CHANGES IN LAWS AND REGULATIONS, INCLUDING
ENVIRONMENTAL, TO WHICH PRECISION IS SUBJECT AND OTHER FACTORS, WHICH ARE
DESCRIBED IN FURTHER DETAIL IN PRECISION'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
CDN $000'S, EXCEPT PER SHARE AMOUNTS
(UNAUDITED) 2003 2002 2003 2002
--------------------------------------------------------------------------------------------------------------------------
Revenue $ 468,097 $ 363,669 $ 1,424,331 $ 1,226,600
Expenses:
Operating 311,931 264,439 966,441 844,742
General and administrative 38,331 38,211 106,991 116,085
Depreciation and amortization 43,686 31,797 132,213 102,293
Research and engineering 13,309 8,990 30,954 25,278
Foreign exchange (2,334) (139) (1,599) 3,655
----------------------------------------------------------------------------------------------------------------------
404,923 343,298 1,235,000 1,092,053
--------------------------------------------------------------------------------------------------------------------------
Operating earnings 63,174 20,371 189,331 134,547
Interest 8,545 8,722 26,945 26,182
Dividend income -- -- -- (39)
Gain on disposal of investments (1,862) (1,000) (3,026) (1,000)
--------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes, non-controlling
interest and discontinued operations 56,491 12,649 165,412 109,404
Income taxes:
Current 5,028 23,696 37,945 64,362
Future 13,417 (21,825) 10,605 (32,943)
----------------------------------------------------------------------------------------------------------------------
18,445 1,871 48,550 31,419
==========================================================================================================================
Earnings before non-controlling interest and
discontinued operations 38,046 10,778 116,862 77,985
Non-controlling interest 274 319 840 1,058
--------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 37,772 10,459 116,022 76,927
Gain on disposal of discontinued operations -- -- 17,460 --
Discontinued operations, net of tax -- 1,787 49 5,475
==========================================================================================================================
Net earnings 37,772 12,246 133,531 82,402
Retained earnings, beginning of period 715,843 598,975 620,084 528,819
--------------------------------------------------------------------------------------------------------------------------
Retained earnings, end of period $ 753,615 $ 611,221 $ 753,615 $ 611,221
==========================================================================================================================
Earnings per share from continuing operations:
Basic $ 0.69 $ 0.19 $ 2.14 $ 1.44
Diluted $ 0.68 $ 0.19 $ 2.10 $ 1.41
==========================================================================================================================
Earnings per share:
Basic $ 0.69 $ 0.23 $ 2.46 $ 1.54
Diluted $ 0.68 $ 0.22 $ 2.42 $ 1.51
==========================================================================================================================
Common shares outstanding (000's) 54,639 53,944 54,639 53,944
Weighted average shares outstanding (000's) 54,514 53,923 54,334 53,599
Diluted shares outstanding (000's) 55,334 54,871 55,226 54,717
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, December 31,
CDN $000's 2003 2002
--------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Current assets:
Cash $ 18,270 $ 17,315
Accounts receivable 512,480 443,799
Income taxes recoverable 7,145 7,804
Inventory 111,972 132,909
----------------------------------------------------------------------------------------------------------------
649,867 601,827
Property, plant and equipment, net of accumulated depreciation 1,595,593 1,521,444
Intangibles, net of accumulated amortization 67,579 72,380
Goodwill 537,692 546,921
Other assets 8,959 17,443
--------------------------------------------------------------------------------------------------------------------
$ 2,859,690 $ 2,760,015
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 135,778 $ 95,321
Accounts payable and accrued liabilities 248,543 268,568
Current portion of long-term debt 18,572 27,682
----------------------------------------------------------------------------------------------------------------
402,893 391,571
Long-term debt 446,372 514,878
Future income taxes 324,771 318,547
Non-controlling interest 2,859 2,019
Shareholders' equity:
Share capital 929,180 912,916
Retained earnings 753,615 620,084
----------------------------------------------------------------------------------------------------------------
1,682,795 1,533,000
--------------------------------------------------------------------------------------------------------------------
$ 2,859,690 $ 2,760,015
====================================================================================================================
Common shares outstanding (000's) 54,639 54,067
Common share purchase options outstanding (000's) 3,542 4,119
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
CDN $000'S (UNAUDITED) 2003 2002 2003 2002
-------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in):
Continuing operations:
Earnings from continuing operations $ 37,772 $ 10,459 $ 116,022 $ 76,927
Items not affecting cash:
Depreciation and amortization 43,686 31,797 132,213 102,293
Gain on disposal of investments (1,862) (1,000) (3,026) (1,000)
Future income taxes 13,417 (21,825) 10,605 (32,943)
Non-controlling interest 274 319 840 1,058
Amortization of deferred financing costs 321 323 965 971
Unrealized foreign exchange (gain) loss on
long-term debt (348) 2,799 (12,899) (436)
------------------------------------------------------------------------------------------------------------------
Funds provided by continuing operations 93,260 22,872 244,720 146,870
Changes in non-cash working capital balances (84,386) (11,465) (85,483) 16,785
-------------------------------------------------------------------------------------------------------------------------
8,874 11,407 159,237 163,655
-------------------------------------------------------------------------------------------------------------------------
Discontinued operations:
Earnings from discontinued operations -- 1,787 17,509 5,475
Items not affecting cash:
Gain on disposal of discontinued operations -- -- (17,460) --
Depreciation and amortization -- 631 133 1,806
Future income taxes -- 200 -- 569
------------------------------------------------------------------------------------------------------------------
Funds provided by discontinued operations -- 2,618 182 7,850
-------------------------------------------------------------------------------------------------------------------------
Investments:
Business acquisitions -- (3,050) (6,800) (3,050)
Purchase of property, plant and equipment (69,049) (59,971) (237,432) (166,363)
Purchase of intangibles -- (63) (6) (2,149)
Proceeds on sale of property, plant and 5,500 8,386 16,646 25,688
equipment
Proceeds on disposal of investments 2,960 1,872 10,580 1,872
Proceeds on disposal of discontinued operations -- -- 67,274 --
Investments 144 -- (730) (147)
---------------------------------------------------------------------------------------------------------------------
(60,445) (52,826) (150,468) (144,149)
-------------------------------------------------------------------------------------------------------------------------
Financing:
Increase in long-term debt 35,980 24,507 80,940 34,626
Repayment of long-term debt (4,486) (5,994) (145,657) (92,439)
Issuance of common shares on exercise of options 6,115 1,826 16,264 21,851
Change in bank indebtedness 21,275 15,360 40,457 19,491
--------------------------------------------------------------------------------------------------------------------
58,884 35,699 (7,996) (16,471)
-------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash 7,313 (3,102) 955 10,885
Cash, beginning of period 10,957 27,218 17,315 13,231
-------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 18,270 $ 24,116 $ 18,270 $ 24,116
=========================================================================================================================
SEGMENT INFORMATION
CDN $000's (unaudited) Contract Technology Rental and Corporate
Three months ended September 30, Drilling Services Production and Other Total
-----------------------------------------------------------------------------------------------------------------------
2003
Revenue $ 227,490 $ 191,748 $ 48,859 $ -- $ 468,097
Operating earnings (loss) 62,236 713 9,247 (9,022) 63,174
Research and engineering -- 13,309 -- -- 13,309
Depreciation and amortization 19,961 19,455 3,072 1,198 43,686
Total assets 1,342,054 1,260,539 174,117 82,980 2,859,690
Goodwill 257,531 251,589 28,572 -- 537,692
Capital expenditures 32,798 27,609 2,269 6,373 69,049
-----------------------------------------------------------------------------------------------------------------------
2002
Revenue $ 154,457 $ 161,569 $ 46,384 $ 1,259 $ 363,669
Operating earnings (loss) 27,327 (7,840) 6,582 (5,698) 20,371
Research and engineering -- 8,990 -- -- 8,990
Depreciation and amortization 14,397 13,028 3,268 1,104 31,797
Total assets 1,279,871 1,084,803 236,983 71,945 2,673,602
Goodwill 257,531 250,045 37,801 -- 545,377
Capital expenditures* 10,530 44,307 3,237 1,960 60,034
-----------------------------------------------------------------------------------------------------------------------
CDN $000's (unaudited) Contract Technology Rental and Corporate
Nine months ended September 30, Drilling Services Production and Other Total
-----------------------------------------------------------------------------------------------------------------------
2003
Revenue $ 701,884 $ 560,135 $ 162,312 $ -- $ 1,424,331
Operating earnings (loss) 186,551 (5,772) 31,857 (23,305) 189,331
Research and engineering -- 30,954 -- -- 30,954
Depreciation and amortization 58,234 61,048 9,364 3,567 132,213
Total assets 1,342,054 1,260,539 174,117 82,980 2,859,690
Goodwill 257,531 251,589 28,572 -- 537,692
Capital expenditures* 62,794 148,817 9,463 16,364 237,438
-----------------------------------------------------------------------------------------------------------------------
2002
Revenue $ 581,137 $ 494,756 $ 149,448 $ 1,259 $ 1,226,600
Operating earnings (loss) 145,188 (15,782) 26,055 (20,914) 134,547
Research and engineering -- 25,278 -- -- 25,278
Depreciation and amortization 46,427 42,704 9,932 3,230 102,293
Total assets 1,279,871 1,084,803 236,983 71,945 2,673,602
Goodwill 257,531 250,045 37,801 -- 545,377
Capital expenditures* 29,534 121,329 14,947 2,702 168,512
-----------------------------------------------------------------------------------------------------------------------
* EXCLUDES BUSINESS ACQUISITIONS
CANADIAN DRILLING OPERATING STATISTICS
NINE MONTHS ENDED SEPTEMBER 30,
2003 2002
----------------------------------------------------------------------
Market Market
Precision Industry* Share % Precision Industry* Share %
----------------------------------------------------------------------
Number of drilling rigs 224 654 34.3 223 642 34.7
Number of operating days (spud to release) 31,094 91,830 33.9 23,379 67,602 34.6
Wells drilled 6,128 15,137 40.5 4,497 10,835 41.5
Average days per well 5.1 6.1 5.2 6.2
Metres drilled (000's) 6,265 15,899 39.4 4,508 11,453 39.4
Average metres/day 201 173 193 169
Average metres/well 1,022 1,050 1,002 1,057
Rig utilization rate (%) 50.6 51.7 38.2 38.5
* Excludes non-CAODC rigs.
A conference call to review the third quarter 2003 results has been scheduled
for 12:00 noon MST on Thursday, October 30, 2003. The conference call dial-in
number is 1-800-814-4853.
A live webcast will be accessible at www.precisiondrilling.com by selecting
Investor Relations.
Precision, headquartered in Calgary, Alberta, Canada, is the largest Canadian
integrated oilfield and industrial services contractor. Precision Drilling
Corporation is listed on The Toronto Stock Exchange under the trading symbol
"PD" and on the New York Stock Exchange under the trading symbol "PDS".
FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT
FINANCE AND CHIEF FINANCIAL OFFICER, TELEPHONE: (403) 716-4500, FAX: (403)
264-0251; WEBSITE: WWW.PRECISIONDRILLING.COM.