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 February 12, 2004
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: February 12, 2004
Calgary, Alberta, Canada - February 12, 2004
PRECISION DRILLING CORPORATION
ANNOUNCES 105% INCREASE IN ANNUAL EARNINGS
Precision Drilling Corporation ("Precision" or the "Corporation") today reports
results for the year and quarter ended December 31, 2003. Diluted earnings per
share for the year increased 105% to $3.41 compared to $1.66 in 2002. Reflecting
the strong activity levels in the Canadian market, fourth quarter diluted
earnings per share from continuing operations increased to $1.17 compared to
$0.12 last year. Included in earnings from continuing operations for the fourth
quarter of 2003 are $3.9 million ($0.05 per share) of charges associated with
the write down of operating assets in the Technology Services segment. Losses
from discontinued operations amounted to $0.18 per share in the fourth quarter
of 2003 bringing net earnings for the period to $0.99 per share.
The review of the business plan for the Technology Services segment was
completed in the fourth quarter of 2003. One of the outcomes of this process was
the identification of two product lines, namely pressure pumping and completion
services carried on by the Fleet Cementers and Polar Completions divisions
respectively, as being not core to the segment's ongoing growth initiatives. As
a result, a program has been initiated to dispose of these businesses and
discussions are being held with interested parties. Results of operations for
these businesses along with those of Energy Industries, which was sold effective
January 1, 2003, have been classified as results from discontinued operations.
The Canadian market has been the significant driver for Precision's improved
results. Sustained high natural gas and crude oil prices combined with favorable
weather conditions in Canada have generated a strong business environment.
Commodity prices were also relatively high in 2002, however, concern over their
sustainment at these high levels have led customers to use a significant portion
of their cash flow to strengthen their balance sheets.
Contract Drilling revenue of $290.9 million and operating earnings of $99.2
million increased by 54% and 152% respectively in the fourth quarter of 2003
compared to the same period of 2002. The Canadian drilling and service rig
operations saw activity levels increase 46% and 19% respectively. The Canadian
drilling fleet achieved 11,631 operating days in the fourth quarter of 2003 and
the service rig fleet generated 113,134 operating hours. The heightened activity
levels brought increased pricing as drilling revenue per operating day increased
by 16% and service revenue per hour increased by 11%.
Precision's international rig fleet grew to 19 at the end of 2003 compared to 16
at the end of 2002. International rig operating days increased by 56% to 1,247
in the fourth quarter of 2003 compared to 2002. Over half of the activity
increase came from Mexico where the fleet now numbers 10 rigs with the addition
of 3 rigs as part of the Burgos project extension. Activity in Venezuela has
also improved with 4 rigs being fully utilized throughout the fourth quarter of
2003. Additional operating days generated by contracts in Asia Pacific and the
Middle East rounded out the activity increase. The positive impact of activity
increases on the profitability of the international drilling operation was
offset somewhat by the devaluation of the US dollar versus the Canadian dollar.
Technology Services revenue increased by $52.3 million or 38% to $189.3 million
in the fourth quarter of 2003 compared to 2002. Operating earnings, which
included a $3.9 million write down of operating assets, increased by $21.5
million over the same period.
Revenue increased in all regions but two while operating earnings increased in
all regions except one. Over half of the segment's revenue increase was
generated in Canada where operating activity increased in conjunction with the
rise in active drilling rigs which, in turn resulted in pricing improvement for
our services. Similarly, US activity rose as the active land rig count increased
from 856 in December 2002 to 1,114 in December 2003. The US also experienced
rate increases, which combined with renewed focus on cost control, generated
significant improvement in profitability. The segment's Mexican operations
benefited from the extension of the Burgos project and also from additional
contract awards in that country. Business in Latin America improved with the
pick up of activity in Venezuela.
The Rental and Production segment saw a 12% increase in revenue and an 86%
increase in operating earnings in the fourth quarter of 2003 compared to 2002.
Much of the improvement came from the rental operation which had 225,000
equipment rental days compared to 157,000 in 2002, reflecting the strong
activity levels in the Canadian market. The plant maintenance business had
strong results from its Canadian industrial group, which saw a 17% year over
year increase in fourth quarter revenue, and from its mechanical group which
continues to experience growth in services provided to the oilsands projects.
Certain statements contained in this press release, including statements which
may contain words such as "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,
performances 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 YEARS ENDED
DECEMBER 31 DECEMBER 31
CDN $000'S, EXCEPT PER SHARE AMOUNTS 2003 2002 2003 2002
-------------------------------------------------------------------------------------------------------------
(UNAUDITED) (Unaudited)
Revenue $ 528,697 $ 369,649 $ 1,917,933 $ 1,567,506
Expenses:
Operating 341,034 273,882 1,273,434 1,094,846
General and administrative 35,585 35,622 136,747 144,466
Depreciation and amortization 45,011 35,048 170,788 133,384
Research and engineering 11,465 9,584 42,419 34,862
Foreign exchange (905) 699 (2,565) 4,389
-------------------------------------------------------------------------------------------------------------
432,190 354,835 1,620,823 1,411,947
-------------------------------------------------------------------------------------------------------------
Operating earnings 96,507 14,814 297,110 155,559
Interest 8,298 9,045 35,050 35,123
Dividend income -- -- -- (39)
Loss (gain) on disposal of investments (329) 100 (3,355) (900)
-------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income
taxes and non-controlling interest 88,538 5,669 265,415 121,375
Income taxes:
Current 20,546 3,564 59,681 64,762
Future 2,093 (4,849) 12,851 (34,072)
-------------------------------------------------------------------------------------------------------------
22,639 (1,285) 72,532 30,690
-------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
non-controlling interest 65,899 6,954 192,883 90,685
Non-controlling interest 912 93 1,752 1,151
-------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 64,987 6,861 191,131 89,534
Gain on disposal of discontinued operations -- -- 17,460 --
Discontinued operations (9,842) 2,002 (19,915) 1,731
-------------------------------------------------------------------------------------------------------------
Net earnings 55,145 8,863 188,676 91,265
Retained earnings, beginning of period 753,615 611,221 620,084 528,819
-------------------------------------------------------------------------------------------------------------
Retained earnings, end of period $ 808,760 $ 620,084 $ 808,760 $ 620,084
=============================================================================================================
Earnings per share from continuing operations:
Basic $ 1.19 $ 0.13 $ 3.51 $ 1.67
Diluted $ 1.17 $ 0.12 $ 3.46 $ 1.63
=============================================================================================================
Earnings per share:
Basic $ 1.01 $ 0.16 $ 3.47 $ 1.70
Diluted $ 0.99 $ 0.16 $ 3.41 $ 1.66
=============================================================================================================
Common shares outstanding (000's) 54,846 54,067 54,846 54,067
Weighted average shares outstanding (000's) 54,769 54,006 54,430 53,702
Diluted shares outstanding (000's) 55,578 55,121 55,299 54,815
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 December 31
CDN $ 000'S 2003 2002
---------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 21,370 $ 17,315
Accounts receivable 544,850 431,331
Income taxes recoverable -- 8,712
Inventory 99,088 92,744
Assets of discontinued operations 21,150 51,725
-----------------------------------------------------------------------------------------------
686,458 601,827
Property, plant and equipment, net of accumulated depreciation 1,588,250 1,457,273
Intangibles, net of accumulated amortization 65,262 71,355
Goodwill 527,443 527,443
Other assets 8,932 17,443
Assets of discontinued operations 32,040 84,674
---------------------------------------------------------------------------------------------------
$2,908,385 $2,760,015
===================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 147,909 $ 95,321
Accounts payable and accrued liabilities 260,545 257,913
Income taxes payable 7,373 --
Current portion of long-term debt 17,158 27,098
Liabilities of discontinued operations 5,212 11,239
-----------------------------------------------------------------------------------------------
438,197 391,571
Long-term debt 399,422 514,878
Future income taxes 320,599 311,164
Future income taxes of discontinued operations 1,107 7,383
Non-controlling interest 3,771 2,019
Shareholders' equity:
Share capital 936,529 912,916
Retained earnings 808,760 620,084
-----------------------------------------------------------------------------------------------
1,745,289 1,533,000
---------------------------------------------------------------------------------------------------
$2,908,385 $2,760,015
===================================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31 DECEMBER 31
--------------------------------------------------------------------------------------------------------
CDN $000's 2003 2002 2003 2002
(Unaudited) (Unaudited)
Cash provided by (used in):
Operations:
Earnings from continuing operations $ 64,987 $ 6,861 $ 191,131 $ 89,534
Items not affecting cash:
Depreciation and amortization 45,011 35,048 170,788 133,384
Future income taxes 2,093 (4,849) 12,851 (34,072)
Loss (gain) on disposal of investments (329) 100 (3,355) (900)
Amortization of deferred financing costs 321 323 1,286 1,294
Unrealized foreign exchange gain on
long-term monetary items (2,308) (2,481) (16,433) (2,039)
Non-controlling interest 912 93 1,752 1,151
--------------------------------------------------------------------------------------------------------
Funds provided by operations 110,687 35,095 358,020 188,352
Changes in non-cash working capital balances (13,939) (11,505) (101,146) (601)
--------------------------------------------------------------------------------------------------------
96,748 23,590 256,874 187,751
Discontinued operations:
Funds provided by (used in) discontinued
operations $ (2,034) $ 4,527 $ (5,692) $ 6,868
Changes in non-cash working capital balances
of discontinued operations 4,294 (399) 7,245 4,604
--------------------------------------------------------------------------------------------------------
2,260 4,128 1,553 11,472
Investments:
Business acquisitions, net of cash required -- (1,544) (6,800) (4,594)
Purchase of property, plant and equipment (77,489) (101,431) (314,921) (267,794)
Purchase of intangibles -- (2,049) (6) (4,198)
Proceeds on sale of property, plant and equipment 7,777 6,761 24,423 32,449
Proceeds on disposal of investments 386 -- 10,966 1,872
Investments (350) (5,525) (1,080) (5,672)
Proceeds on disposal of discontinued operations -- -- 67,274 --
--------------------------------------------------------------------------------------------------------
(69,676) (103,788) (220,144) (247,937)
Financing:
Increase in long-term debt 4,288 84,754 85,228 119,380
Repayment of long-term debt -- (9,836) (145,657) (102,275)
Issuance of common shares 7,349 3,905 23,613 25,756
Change in bank indebtedness (37,869) (9,554) 2,588 9,937
--------------------------------------------------------------------------------------------------------
(26,232) 69,269 (34,228) 52,798
Increase (decrease) in cash 3,100 (6,801) 4,055 4,084
Cash, beginning of period 18,270 24,116 17,315 13,231
--------------------------------------------------------------------------------------------------------
Cash, end of period $ 21,370 $ 17,315 $ 21,370 $ 17,315
========================================================================================================
SEGMENT INFORMATION
THREE MONTHS ENDED DECEMBER 31, 2003 Contract Technology Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
------------------------------------------------------------------------------------------------------------------
Revenue $ 290,940 $ 189,345 $ 48,412 $ -- $ 528,697
Operating earnings 99,161 (617) 7,493 (9,530) 96,507
Research and engineering -- 11,465 -- -- 11,465
Depreciation and amortization 19,491 20,966 3,169 1,385 45,011
Total assets 1,423,036 1,257,235 166,300 61,814 2,908,385
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 36,240 28,939 5,695 6,615 77,489
------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31, 2002 Contract Technology Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
------------------------------------------------------------------------------------------------------------------
Revenue $ 189,010 $ 137,075 $ 43,392 $ 172 $ 369,649
Operating earnings 39,365 (22,149) 4,035 (6,437) 14,814
Research and engineering -- 9,584 -- -- 9,584
Depreciation and amortization 16,097 14,600 3,227 1,124 35,048
Total assets 1,312,459 1,127,550 240,842 79,164 2,760,015
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 21,152 67,763 7,399 7,166 103,480
------------------------------------------------------------------------------------------------------------------
TWELVE MONTHS ENDED DECEMBER 31, 2003 Contract Technology Rental and Corporate
CDN $000's Drilling Services Production and Other Total
------------------------------------------------------------------------------------------------------------------
Revenue $ 992,824 $ 714,385 $ 210,724 $ -- $1,917,933
Operating earnings 285,753 4,842 39,350 (32,835) 297,110
Research and engineering -- 42,419 -- -- 42,419
Depreciation and amortization 77,725 75,578 12,533 4,952 170,788
Total assets 1,423,036 1,257,235 166,300 61,814 2,908,385
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 99,034 177,756 15,158 22,979 314,927
------------------------------------------------------------------------------------------------------------------
TWELVE MONTHS ENDED DECEMBER 31, 2002 Contract Technology Rental and Corporate
CDN $000's Drilling Services Production and Other Total
------------------------------------------------------------------------------------------------------------------
Revenue $ 770,147 $ 603,088 $ 192,840 $ 1,431 $ 1,567,506
Operating earnings 184,553 (31,733) 30,090 (27,351) 155,559
Research and engineering -- 34,862 -- -- 34,862
Depreciation and amortization 62,524 53,347 13,159 4,354 133,384
Total assets 1,312,459 1,127,550 240,842 79,164 2,760,015
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 50,686 189,092 22,346 9,868 271,992
------------------------------------------------------------------------------------------------------------------
* excludes business acquisitions
CANADIAN DRILLING OPERATING STATISTICS
FOR THE YEARS ENDED DECEMBER 31,
2003 2002
---------------------------------------------------------------------
Market Market
Precision Industry* Share % Precision Industry* Share %
---------------------------------------------------------------------
Number of drilling rigs 225 660 34.1 226 644 35.1
Number of operating days (spud to release) 42,725 126,457 33.8 31,363 91,958 34.1
Wells drilled 8,451 20,694 40.8 6,315 14,920 42.3
Average days per well 5.1 6.1 5.0 6.2
Metres drilled (000's) 8,604 21,802 39.5 6,222 15,708 39.6
Average meters per day 201 172 198 171
Average meters per well 1,018 1,054 985 1,053
Rig utilization rate (%) 52.0 53.1 38.3 39.1
* Excludes non-CAODC rigs.
A conference call to review the year-end results has been scheduled for 12:00
noon MST on Thursday, February 12, 2004. The conference call dial-in number is
1-800-814-4853.
A live webcast will be accessible at www.precisiondrilling.com.
Precision Drilling Corporation (TSX: PD and PD.U; NYSE: PDS) is a global
oilfield services company providing a broad range of drilling, production and
evaluation services with focus on fulfilling customer needs through
fit-for-purpose technologies for the maturing oilfields of the 21st century.
With corporate offices in Calgary, Alberta, Canada and Houston, Texas, and
research facilities in the U.S. and Europe, Precision employs more than 10,000
people conducting operations in more than 30 countries. Precision is committed
to providing efficient and safe services to create value for our customers, our
shareholders and our employees.
FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT,
FINANCE AND CHIEF FINANCIAL OFFICER, 4200, 150 6TH AVENUE S.W., CALGARY,
ALBERTA, T2P 3Y7, TELEPHONE: (403) 716-4500, FAX: (403) 264-0251; WEBSITE:
WWW.PRECISIONDRILLING.COM.