CALGARY – Precision Drilling Corp. says uses of its rigs was cut by more than half in Canada and the United States in the fourth quarter compared with a year earlier, resulting in less cash from operations and a bigger loss.
As a result, the Calgary-based company — Canada’s largest contract drilling company for the energy sector — says it’s suspending its dividend immediately. It had been paying seven cents per share each quarter throughout 2015.
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Precision Drilling also revealed that its spending on capital projects last year totalled $459 million — $72 million less than a revised plan announced in October as the fourth quarter began.
The company’s net loss for the fourth quarter that ended Dec. 31 was $271 million, or 93 cents per share — more than double the year-earlier loss of $114 million or 39 cents per share.
Revenue for the quarter was $345 million, 44 cents below the fourth quarter of 2014, and cash provided by operations was $71 million — a decline of 47 per cent.
Bad as the fourth quarter was, Precision Drilling’s president and chief executive says the company’s cash flows were better than expected and its financial liquidity improved — with $445 million of cash plus available credit.
“The land drilling industry is almost a year and a half into a deep downturn, a result of lower commodity prices pushing customer spending down and decreasing drilling demand,” Precision Drilling CEO Kevin Neveu said in a statement.
“There is limited visibility with few positive market signals. In this protracted challenging environment, financial stability is paramount for both survival and sustaining competitive advantage.”
Rig activity in Canada was down 51 per cent while in the United States it was down 55 per cent and elsewhere it was down 23 per cent.