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 May 1, 2003
Commission File Number:
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
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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: May 1, 2003
Calgary, Alberta, Canada - May 1, 2003
PRECISION DRILLING ANNOUNCES STRONG FIRST QUARTER RESULTS - MARCH 31, 2003
Precision Drilling Corporation ("Precision" or the "Corporation") today reports
strong results for the first quarter of 2003. Earnings per share from continuing
operations for the quarter was $1.30 compared to $1.19 in the first quarter of
the prior year. Results from continuing operations were reduced by $0.07 per
share due to the net impact of writing down operating assets, settlement of two
disputes and costs incurred related to restructuring certain operations. The
gain on disposal of Energy Industries Inc. ("Energy Industries") added earnings
of $0.24 per share for a total of $1.54 for the quarter while the impact of
Energy Industries earnings on 2002 was $0.04 per share for a total of $1.23.
Operating earnings as a percentage of revenue was 30% and 5% for the Contract
Drilling and Technology Services segments, respectively, compared to 33% and 4%
in 2002. The above-mentioned items reduced operating earnings for the Contract
Drilling and Technology Services segments by $3.3 million and $6.3 million
respectively and increased operating earnings in the Corporate segment by $3.1
million. Contract Drilling operating earnings, as a percentage of revenue,
excluding the impact of these items, was 31% in 2003 compared to 33% in 2002.
Technology Services operating earnings before the impact of these items was
$16.7 million or 8% of revenue, doubling the previous year's 4%.
Contract Drilling revenue of $335.9 million in the first quarter of 2003
increased by $30.3 million or 10% compared to the same period in 2002. The
increase was the result of heightened activity in Canada where rig operating
days for the Corporation increased 19% over the same period of the prior year
partially offset by a 3% decrease in drilling day rates. The increase
experienced in Canada was offset somewhat by a decrease in revenue from
international operations due to the political instability in Venezuela and the
strengthening Canadian dollar when compared to the US dollar.
Revenue in Technology Services of $214.7 million was a 15% increase over the
first quarter of 2002. In line with Contract Drilling, the majority of the
increase was from the Canadian market where revenue was up 19%. The improved
EMpulse(TM) electromagnetic (EM) measurement while drilling (MWD) system
delivered significant operational efficiencies during the first quarter, which
contributed to increased market share and financial performance. During the
quarter the Corporation also took significant steps to reduce costs and improve
profitability without limiting the ability to globalize our core product
offerings.
The Corporation sold its 100% owned subsidiary Energy Industries with an
effective date of January 1, 2003. After excluding the impact of Energy
Industries, revenue from the Rental and Production segment of $49.6 million was
up 4% from the same quarter in the prior year. The improvement in the oilfield
activity in Canada had a direct impact on the Company's rental business, which
saw a revenue increase year over year of 31%. The industrial plant maintenance
business remained at similar activity levels as in the prior year.
The Corporation's commitment to international expansion will continue with a
heightened focus on sustainable profitability. That being said, the anticipated
record activity levels in Canada, where the Corporation enjoys a dominant
position, will be the driver for improved earnings.
Certain statements contained in this press release, including statements which
are related to drilling activity and future profitability and 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) 2003 2002
-----------------------------------------------------------------------------------------------------------------------
Revenue $ 600,233 $ 539,626
Expenses:
Operating 387,377 339,622
General and administrative 36,698 40,205
Depreciation and amortization 50,746 40,721
Research and engineering 9,281 8,061
Foreign exchange 93 (7)
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484,195 428,602
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Operating earnings 116,038 111,024
Interest 9,435 8,917
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Earnings before income taxes, non-controlling interest and discontinued
operations 106,603 102,107
Income taxes:
Current 22,035 28,718
Future 12,456 8,608
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34,491 37,326
=======================================================================================================================
Earnings before non-controlling interest and discontinued operations 72,112 64,781
Non-controlling interest 286 305
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Earnings from continuing operations 71,826 64,476
Gain on disposal of discontinued operations 13,071 -
Discontinued operations, net of tax - 2,353
=======================================================================================================================
Net earnings 84,897 66,829
Retained earnings, beginning of period 620,084 528,819
=======================================================================================================================
Retained earnings, end of period $ 704,981 $ 595,648
=======================================================================================================================
Earnings per share from continuing operations:
Basic $ 1.33 $ 1.21
Diluted $ 1.30 $ 1.19
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Earnings per share:
Basic $ 1.57 $ 1.25
Diluted $ 1.54 $ 1.23
=======================================================================================================================
Common shares outstanding (000's) 54,266 53,388
Weighted average shares outstanding (000's) 54,161 53,253
Diluted shares outstanding (000's) 55,149 54,189
CONSOLIDATED BALANCE SHEETS
MARCH 31, December 31,
CDN $ 000'S 2003 2002
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(UNAUDITED)
ASSETS
Current assets:
Cash $ 26,697 $ 17,315
Accounts receivable 614,057 443,799
Income taxes recoverable 2,921 7,804
Inventory 120,463 132,909
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764,138 601,827
Property, plant and equipment, net of accumulated depreciation 1,529,635 1,521,444
Intangibles, net of accumulated amortization 70,773 72,380
Goodwill 537,692 546,921
Other assets 17,880 17,443
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$ 2,920,118 $ 2,760,015
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 98,480 $ 95,321
Accounts payable and accrued liabilities 290,763 268,568
Current portion of long-term debt 25,466 27,682
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414,709 391,571
Long-term debt 551,870 514,878
Future income taxes 327,128 318,547
Non-controlling interest 2,305 2,019
Shareholders' equity:
Share capital 919,125 912,916
Retained earnings 704,981 620,084
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1,624,106 1,533,000
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$ 2,920,118 $ 2,760,015
====================================================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED
MARCH 31,
CDN $000'S (UNAUDITED) 2003 2002
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Cash provided by (used in):
Continuing operations:
Net earnings $ 71,826 $ 64,476
Items not affecting cash:
Depreciation and amortization 50,746 40,721
Future income taxes 12,456 8,608
Non-controlling interest 286 305
Amortization of deferred financing costs 322 324
Unrealized foreign exchange gain on long-term debt (4,744) (381)
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Funds provided by continuing operations 130,892 114,053
Changes in non-cash working capital balances (150,704) (96,592)
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(19,812) 17,461
Discontinued operations:
Net earnings 13,071 2,353
Items not affecting cash:
Gain on disposal of discontinued operations (13,071) -
Depreciation and amortization - 453
Future income taxes - 414
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Funds provided by discontinued operations - 3,220
Investments:
Business acquisitions (6,800) -
Purchase of property, plant and equipment (76,726) (46,780)
Purchase of intangibles (6) (115)
Proceeds on sale of property, plant and equipment 4,237 6,158
Proceeds on disposal of discontinued operations 60,360 -
Investments (759) (147)
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(19,694) (40,884)
Financing:
Increase in long-term debt 44,960 10,119
Repayment of long-term debt (5,440) (6,345)
Issuance of common shares on exercise of options 6,209 5,422
Change in bank indebtedness 3,159 4,614
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48,888 13,810
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Increase (decrease) in cash 9,382 (6,393)
Cash, beginning of period 17,315 13,231
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Cash, end of period $ 26,697 $ 6,838
======================================================================================================================
SEGMENT INFORMATION
THREE MONTHS ENDED MARCH 31, 2003 Contract Technology Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
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Revenue $ 335,872 $ 214,740 $ 49,621 $ - $ 600,233
Operating earnings 102,389 10,381 8,335 (5,067) 116,038
Research and engineering - 9,281 - - 9,281
Depreciation and amortization 25,746 20,508 3,319 1,173 50,746
Total assets 1,421,031 1,238,468 179,365 81,254 2,920,118
Goodwill 257,531 251,589 28,572 - 537,692
Capital expenditures* 8,298 60,028 3,849 4,557 76,732
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THREE MONTHS ENDED MARCH 31, 2002 Contract Technology Rental and Corporate
CDN $000's (unaudited) Drilling Services Production and Other Total
-------------------------------------------------------------------------------------------------------------------------
Revenue $ 305,583 $ 186,196 $ 47,847 $ - $ 539,626
Operating earnings 101,522 8,023 8,993 (7,514) 111,024
Research and engineering - 8,061 - - 8,061
Depreciation and amortization 20,680 15,690 3,294 1,057 40,721
Total assets 1,417,525 1,057,149 246,387 48,712 2,769,773
Goodwill 257,531 250,045 37,801 - 545,377
Capital expenditures* 9,841 28,163 8,611 280 46,895
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*excludes acquisitions
CANADIAN DRILLING OPERATING STATISTICS
FOR THE THREE MONTHS ENDED MARCH 31,
2003 2002
---------------------------------- -----------------------------------
Market Market
Precision Industry* Share % Precision Industry* Share %
---------------------------------- -----------------------------------
Number of drilling rigs 225 648 34.7 224 649 34.5
Number of operating days (spud to release) 14,641 42,024 34.8 12,289 34,527 35.6
Wells drilled 2,281 5,383 42.4 1,722 4,245 40.6
Average days per well 6.4 7.8 7.1 8.1
Metres drilled (000's) 2,391 5,950 40.2 1,911 4,747 40.3
Average metres per day 163 142 155 137
Average metres per well 1,048 1,105 1,110 1,118
Rig utilization rate (%) 72.3 72.1 60.5 59.4
* Excludes non-CAODC rigs.
A conference call to review the first quarter 2003 results has been scheduled
for 12:00 noon MST on Thursday, May 1, 2003. The conference call dial-in number
is 1-800-814-4853.
A live webcast will be accessible at www.precisiondrilling.com.
Precision Drilling Corporation is listed on the Toronto Stock Exchange under the
ticker symbol "PD" and on the New York Stock Exchange under the ticker symbol
"PDS".
FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT,
FINANCE AND CHIEF FINANCIAL OFFICER, TELEPHONE: (403) 716-4500, FAX: (403)
264-0251; WEBSITE: WWW.PRECISIONDRILLING.COM.