Precision cashes in with Grey Wolf buy

By Upstream staff

Precision Drilling Trust has seen its takeover of US onshore drilling contractor Grey Wolf pay off, with the Canadian player booking a a 51% jump in revenue and a 67% rise in earnings before interest, taxes, depreciation and amortisation (EBITDA) in the second quarter.

Revenue for the second quarter of 2009 came in at $210 million compared with $139 million for the same period in 2008. EBITDA was $59 million for the quarter, an increase of $24 million over the second quarter of 2008. Precision reported net earnings of $57 million or $0.22 per diluted unit for the quarter ended 30 June, an increase of $35 million or 164% compared to $22 million or $0.16 per diluted unit in the second quarter of 2008.

However, earnings in the second quarter were reduced by a $43 million increase in finance charges. For the six months ended 30 June 2009, net earnings were $115 million or $0.50 per diluted unit, a decrease of $13 million or 10% compared to $128 million or $0.95 per diluted unit for the first half of 2008. Net earnings dropped due to increased financing charges and lower utilisation rates throughout North America partially offset by growth in Precision's rig fleet in the US.

Rig utilisation days for the first six months of 2009 were 23% higher than the same period of 2008 due to growth in Precision's US operations. EBITDA for the first half of 2009 totalled $229 million, a 25% increase from $183 million for the first half of 2008.

Company boss Kevin Neveu said: "Precision's second quarter results were achieved against the back drop of historically low utilization during Canadian spring break-up and the apparent bottoming of customer demand in the US.

"Under these challenging market conditions, I appreciate the exceptional efforts of our people delivering cost reductions and successfully integrating the Grey Wolf acquisition."