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 April 29, 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: April 29, 2004
Calgary, Alberta, Canada - April 29, 2004
PRECISION DRILLING CORPORATION
ANNOUNCES RECORD QUARTERLY EARNINGS
Precision Drilling Corporation ("Precision" or the "Corporation") today
announces record results for the quarter ended March 31, 2004. Diluted earnings
per share from continuing operations were $1.91 compared to $1.34 for the first
quarter of 2003, a 43% increase. Diluted net earnings per share of $1.79 for the
quarter ended March 31, 2004 includes a reduction of $0.12 per share stemming
from discontinued operations. In the first quarter of 2003, discontinued
operations added $0.17 to diluted net earnings per share. Also, effective
January 1, 2004, Precision has expensed the cost of share purchase options
granted to employees and directors and has restated the 2003 comparative amounts
to give effect to this accounting treatment. The impact was to reduce diluted
net earnings per share in the first quarter of 2004 and 2003 by $0.04 and $0.03,
respectively.
With respect to discontinued operations, an additional loss of $0.9 million was
realized on the completion of the sale of the Fleet Cementers division. An
agreement for the sale of substantially all of the assets of the Polar
Completions division was entered into and the carrying value of these assets has
been written down by $6.1 million to reflect the agreed sales price. This
transaction is expected to close on or about May 7, 2004.
Contract Drilling saw a 42% increase in operating earnings from $104.5 million
in 2003 to $148.6 million in 2004. Canadian operations accounted for 89% of this
increase with improved pricing providing the impetus for the stronger results.
Drilling rig operating days increased by less than 1% year over year, however,
average drilling revenue per day increased by 12%. Service rig operating hours
and revenue per hour both increased by 8% in the first quarter of 2004 compared
to the first quarter of 2003.
Operating earnings generated by international drilling operations increased by
64% in line with the 58% increase in operating days. Operating days increased in
Mexico with the addition of three rigs to the Burgos project in Venezuela as
activity in that country picked up after working through the impact of the
national strike in 2003, and in the Middle East where the Corporation began
drilling operations in the fourth quarter of 2003.
Technology Services realized a 127% increase in operating earnings to $29.8
million in the first quarter of 2004 compared to $13.1 million in the same
period of 2003. Revenue increased by $24.2 million or 12% over the same periods.
Over half of the increase in operating earnings was generated by Canadian
operations which saw an improvement in both activity levels and pricing.
Significant improvements were also shown in the segment's US operations
primarily as a result of cost savings generated by restructuring initiatives.
Mexico operations saw increased operating earnings as a result of additional
activity on the Burgos project and South America benefited from the improved
situation in Venezuela. These improvements were offset somewhat by additional
research and engineering spending, much of which was focused on rotary steerable
development.
Rental and Production revenue remained relatively consistent at $50.7 million in
2004 compared to $49.6 million in 2003. Operating earnings improved in both the
equipment rental and industrial plant maintenance businesses.
Precision reduced its total borrowings by $80.8 million during the quarter from
$564.5 million at December 31, 2003 to $483.7 million at March 31, 2004. This is
the result of cash inflows from operations, sale of discontinued operations and
the exercise of stock options being in excess of capital spending.
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
MARCH 31,
CDN $000's, except per share amounts (unaudited) 2004 2003
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(restated)
Revenue $ 665,165 $ 587,970
Expenses:
Operating 387,862 376,037
General and administrative 42,807 35,224
Depreciation and amortization 49,725 48,858
Research and engineering 11,263 8,899
Foreign exchange 312 101
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491,969 469,119
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Operating earnings 173,196 118,851
Interest 8,188 9,269
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Earnings from continuing operations before income taxes and
non-controlling interest 165,008 109,582
Income taxes:
Current 36,893 22,568
Future 19,820 12,582
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56,713 35,150
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Earnings from continuing operations before non-controlling interest 108,295 74,432
Non-controlling interest 857 286
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Earnings from continuing operations 107,438 74,146
Discontinued operations, net of tax (6,919) 8,983
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Net earnings 100,519 83,129
Retained earnings, beginning of period 794,279 613,805
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Retained earnings, end of period $ 894,798 $ 696,934
===========================================================================================================
Earnings per share from continuing operations:
Basic $ 1.94 $ 1.37
Diluted $ 1.91 $ 1.34
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Earnings per share:
Basic $ 1.81 $ 1.53
Diluted $ 1.79 $ 1.51
===========================================================================================================
Common shares outstanding (000's) 55,753 54,266
Weighted average shares outstanding (000's) 55,485 54,161
Diluted shares outstanding (000's) 56,309 55,149
CONSOLIDATED BALANCE SHEETS
MARCH 31, December 31,
CDN $ 000's 2004 2003
-----------------------------------------------------------------------------------------------------------
(unaudited) (restated)
ASSETS
Current assets:
Cash $ 20,209 $ 21,370
Accounts receivable 699,391 544,850
Inventory 95,676 99,088
Assets of discontinued operations 12,312 21,150
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827,588 686,458
Property, plant and equipment, net of accumulated depreciation 1,587,732 1,588,250
Intangibles, net of accumulated amortization 63,778 65,262
Goodwill 528,547 527,443
Other assets 8,612 8,932
Assets of discontinued operations 4,086 32,040
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$ 3,020,343 $ 2,908,385
===========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 79,077 $ 147,909
Accounts payable and accrued liabilities 292,631 260,545
Income taxes payable 15,177 7,373
Current portion of long-term debt 13,418 17,158
Liabilities of discontinued operations 5,490 5,212
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405,793 438,197
Long-term debt 391,172 399,422
Future income taxes 340,356 320,599
Future income taxes of discontinued operations -- 1,107
Non-controlling interest 4,628 3,771
Shareholders' equity:
Contributed surplus 15,766 14,266
Share capital 967,830 936,744
Retained earnings 894,798 794,279
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1,878,394 1,745,289
-----------------------------------------------------------------------------------------------------------
$ 3,020,343 $ 2,908,385
===========================================================================================================
Common shares outstanding (000's) 55,753 54,846
Common share purchase options outstanding (000's) 2,547 3,393
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED
MARCH 31,
CDN $000's, (unaudited) 2004 2003
-----------------------------------------------------------------------------------------------------------
(restated)
Cash provided by (used in):
Continuing operations:
Earnings from continuing operations $ 107,438 $ 74,146
Items not affecting cash:
Stock-based compensation 2,051 1,672
Depreciation and amortization 49,725 48,858
Future income taxes 19,820 12,582
Non-controlling interest 857 286
Amortization of deferred financing costs 320 322
Unrealized foreign exchange loss (gain) on long-term
monetary items 285 (5,464)
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Funds provided by continuing operations 180,496 132,402
Changes in non-cash working capital balances (111,238) (149,713)
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69,258 (17,311)
Discontinued operations:
Funds provided by (used in) discontinued operations (3,898) (2,230)
Changes in non-cash working capital balances of
discontinued operations 8,592 (271)
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4,694 (2,501)
Investments:
Business acquisitions (630) (6,800)
Purchase of property, plant and equipment (53,728) (76,732)
Proceeds on sale of property, plant and equipment 4,713 4,237
Proceeds on disposal of discontinued operations 25,746 60,360
Investments -- (759)
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(23,899) (19,694)
Financing:
Increase in long-term debt 1,263 44,960
Repayment of long-term debt (4,365) (5,440)
Issuance of common shares on exercise of options 30,535 6,209
Change in bank indebtedness (78,647) 3,159
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(51,214) 48,888
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Increase (decrease) in cash (1,161) 9,382
Cash, beginning of period 21,370 17,315
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Cash, end of period $ 20,209 $ 26,697
===========================================================================================================
SEGMENT INFORMATION
THREE MONTHS ENDED MARCH 31, 2004 CONTRACT TECHNOLOGY RENTAL AND CORPORATE
CDN $000'S (unaudited) DRILLING SERVICES PRODUCTION AND OTHER TOTAL
-----------------------------------------------------------------------------------------------------------
Revenue $ 387,251 $ 227,214 $ 50,700 $ -- $ 665,165
Operating earnings 148,608 29,793 9,741 (14,946) 173,196
Research and engineering -- 11,263 -- -- 11,263
Depreciation and amortization 24,357 20,655 3,302 1,411 49,725
Total assets 1,502,344 1,283,193 178,946 55,860 3,020,343
Goodwill 257,531 242,314 28,702 -- 528,547
Capital expenditures* 17,201 25,723 6,465 4,339 53,728
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THREE MONTHS ENDED MARCH 31, 2003 CONTRACT TECHNOLOGY RENTAL AND CORPORATE
CDN $000'S (unaudited) DRILLING SERVICES PRODUCTION AND OTHER TOTAL
-----------------------------------------------------------------------------------------------------------
Revenue $ 335,312 $ 203,037 $ 49,621 $ -- $ 587,970
Operating earnings 104,525 13,098 8,271 (7,043) 118,851
Research and engineering -- 8,899 -- -- 8,899
Depreciation and amortization 25,613 18,753 3,319 1,173 48,858
Total assets 1,421,031 1,238,468 179,365 81,254 2,920,118
Goodwill 257,531 241,340 28,572 -- 527,443
Capital expenditures* 8,298 60,028 3,849 4,557 76,732
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*excludes acquisitions
CANADIAN DRILLING OPERATING STATISTICS
FOR THE THREE MONTHS ENDED MARCH 31,
2004 2003
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MARKET MARKET
PRECISION INDUSTRY* SHARE % PRECISION INDUSTRY* SHARE %
----------------------------------------------------------------------
Number of drilling rigs 226 679 33.3 225 648 34.7
Number of operating days (spud to release) 14,768 45,189 32.7 14,641 42,024 34.8
Wells drilled 2,283 6,159 37.1 2,281 5,383 42.4
Average days per well 6.5 7.3 6.4 7.8
Metres drilled (000's) 2,571 7,087 36.3 2,391 5,950 40.2
Average metres per day 174 157 163 142
Average metres per well 1,126 1,151 1,048 1,105
Rig utilization rate (%) 71.9 73.2 72.3 72.1
* Excludes non-CAODC rigs.
A conference call to review the first quarter 2004 results has been scheduled
for 12:00 noon MST on Thursday, April 29, 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.