Precision Drilling Forecasts 'Flat' Earnings In FY99
Dow Jones Newswires
TORONTO -- Precision Drilling Corp. (PDS) is
forecasting "flat" earnings for fiscal 1999, chairman,
president and chief executive Hank Swartout said during
a conference call Monday.
As reported, Precision earned C$2.67 a diluted share in
fiscal 1998, which ended April 30, on revenues of
C$1.01 billion.
"As we go forward, we see that there will be a decrease
in the number of wells drilled," Swartout said. "We think
things will be steady. We don't think there will be a
major increase in the earnings per share. We're just
predicting somewhere in the flat area."
Precision executives also said they expect to announce
an acquisition Tuesday of a company in Manitoba that
will be added to the company's Certified Rentals unit,
part of one of the company's three divisions, the
Industrial Rental and Manufacturing Group. The
acquisition will add four branches to Certified's 10
existing branches. Certified rents tools and equipment to
various industries.
As reported earlier Monday, Precision Drilling Corp.
(PDS) closed the acquisition of 16 service rigs from
Brockham Oilwell Servicing (1986) Ltd. and B.O.S.
Well Servicing Inc.
In Monday's conference call, Hank Swartout, chairman,
president and chief executive of Precision, wouldn't
disclose the price of the acquisition.
This acquisition will be added to the company's Oilfield
Specialty Services Group. The company's third division
is its Contract Drilling Group.
It was also mentioned during the call that Precision
recently bought seven drilling rigs from Brinker Hoff
Drilling Inc. Precision chose to buy assets of the
company, but not the company.
Precision had capital expenditures of about C$60 million
in fiscal 1998, but could easily cut its spending to C$30
million to C$40 million in fiscal 1999, Swartout said.
Given that 1998 drilling in Canada is expected to be
down about 20% from record drilling in 1997, Swartout
said he can forecast flat earnings for Precision because
the company has undertaken cost cutting programs and
has improved the profitability at some of its recent
acquisitions.
Precision said unusually excessive rain in Western Canada
is slowing down drilling in the company's first quarter.
"We budgeted for a tough first quarter," Swartout said.
"We feel comfortable that for the first quarter we
budgeted, we feel we'll be very close to making. It's the
rain that makes a big difference." If the wet weather
continues through the summer, Swartout said the
company's second quarter could "be down a bit." But
the company has flexibility in its third and fourth quarter,
he added.
On the company's acquisition strategy, Swartout said the
company isn't likely to buy more drilling rigs in Canada,
although there are a "few more we want." Instead, he
sees the company expanding in the Oilfield Specialty
Services side of the company, as it did with the
acquisition of Inter-Tech Drilling Solutions Ltd. and
Northland Energy Corp. "We can accelerate our cash
on that side better than we can on the drilling side."
Swartout said Precision has considered breaking the
company up or would consider selling off any units that a
buyer offers an attractive price for. "We're looking at
any strategic growth pattern that we can," Swartout said.
He said he is also looking world-wide for deals.
"Everybody knows that if I had a choice we would like
to be part of a team that is the best land-based drilling
contractor in the world and whether the rest of the
company comes with us, we have enough talent... that
we could have two great companies.
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