Precision Drilling Corp. (NYSE: PDS) said July 21 drilling activity in North America in the second quarter was the lowest in decades, but added that oil producers were resetting capital budgets due to the recent rally in crude prices.
Due to the weak activity, Canada's Precision Drilling also posted a bigger loss for the period, but managed to beat analysts' estimates because of improved drilling efficiencies.
North American oil producers have started putting rigs back to work, encouraged by a 70% jump in U.S. crude oil prices since they hit near-record lows in February.
"Our customers appear to be looking beyond the oil price lows of earlier this year, resetting spending to current commodity price levels, and beginning the early stages of planning for improved longer term fundamentals," Precision Drilling Chief Executive Kevin Neveu said.
Encana Corp. on July 21 said it would raise its 2016 capex by $200 million.
The decrease in the North American rig count has resulted in the trend of high-grading toward Tier 1 rigs, said Neveu, referring to a practice that helps oil producers improve productivity without raising spending significantly.
Precision Drilling's U.S. rig count is now up 27%, to 28 active rigs, from trough levels, Neveu said. The company currently has 27 active rigs in Canada.
The industry-wide rig count in the U.S. climbed by 7 to 447 in the week ended July 15, but was far short of a peak of 1,931 in September 2014.
Precision Drilling said its contract backlog rose by one rig in 2016 and that it added four rigs on average under contract for 2017.
The company's revenue more than halved to about C$164 million in the second quarter ended June 30. Its loss increased to C$57.7 million (US$44.3 million), or 20 Canadian cents per share, from C$29.8 million, or 10 Canadian cents per share.
Analysts were expecting a loss of 24 Canadian cents per share, according to Thomson Reuters. (US$1 = C$1.3038)
Recommended Reading
U.S. Shale-catters to IPO Australian Shale Explorer on NYSE
2024-05-04 - Tamboran Resources Corp. is majority owned by Permian wildcatter Bryan Sheffield and chaired by Haynesville and Eagle Ford discovery co-leader Dick Stoneburner.
1Q24 Dividends Declared in the Week of April 29
2024-05-03 - With earnings season in full swing, upstream and midstream companies are declaring quarterly dividends. Here is a selection of dividends announced in the past week.
Analyst Questions Kimmeridge’s Character, Ben Dell Responds
2024-05-02 - The analyst said that “they don’t seem to be particularly good actors.” Ben Dell, Kimmeridge Energy Partners managing partner, told Hart Energy that “our reputation is unparalleled.”
Tellurian Reports Driftwood LNG Progress Amid Low NatGas Production
2024-05-02 - Tellurian’s Driftwood LNG received an extension through 2029 with authorization from the Federal Energy Regulatory Commission and the U.S. Army Corps of Engineers.
Zeta Energy Appoints Michael Everett as COO
2024-05-02 - Prior to joining Zeta Energy, a lithium-sulfur battery developer, Michael Everett previously served as president and COO at Advanced Battery Concepts.