Precision Drilling Trust Reports 2007 Fourth Quarter and Year End Financial Results
Precision Drilling Trust Reports 2007 Fourth Quarter and Year End Financial Results Thursday February 14, 7:00 am ET
CALGARY, ALBERTA--(MARKET WIRE)--Feb 14, 2008 -- (Canadian dollars unless stated otherwise) This news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For a full discussion of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this report.
Precision Drilling Trust ("Precision" or the "Trust") reported net earnings of $89 million or $0.71 per unit for the fourth quarter of 2007, a decrease of $38 million or 30% compared to $127 million or $1.01 per unit in the fourth quarter of 2006. For the year ended December 31, 2007 Precision's net earnings were $346 million or $2.75 per unit, a decrease of $234 million or 40% compared to $580 million or $4.62 per unit for the year ended December 31, 2006. Fiscal 2007 results were impacted by the Canadian decline in the drilling and service of natural gas wells with partial offset by Precision's successful growth in the United States land drilling market. For the fourth quarter of 2007, net earnings benefited from a future income tax recovery of $20 million associated with enacted Canadian federal income tax rate reductions and was lowered by an asset write down charge of $7 million for decommissioned rigs and a $5 million expense for salaried personnel reductions. As a net result of these three items fourth quarter 2007 net earnings increased by $12 million or $0.10 per unit as compared to nil in the fourth quarter of 2006. For fiscal 2006 future income tax recoveries were $21 million or $0.17 per unit.
"Precision finished a challenging 2007 with very encouraging results. I am especially pleased with the 2007 operating earnings margin of 35% in light of the significantly reduced activity levels, intense competition and continued labour challenges in western Canada. Throughout the year, and especially the fourth quarter, our people maintained a strong focus on reducing costs while improving our safety performance and extending our reputation as a high performance driller," said Kevin Neveu, Precision's Chief Executive Officer.
Revenue in the fourth quarter was 24% lower than the prior year at $249 million with revenue in the Contract Drilling Services segment decreasing 22% and the Completion and Production Services segment decreasing 28%.
For the quarter and year, geographic diversification continued to mitigate lower activity and earnings in Canada. Precision has grown its United States land drilling activity about ten-fold over the prior year. In the fourth quarter of 2007 Precision commissioned three new Super Single(TM) drilling rigs in Texas and moved a triple rig from Canada to Wyoming. In December 2007 Precision mobilized a triple rig from Canada to Latin America and commenced drilling in January 2008.
In December 2007, Precision announced an estimated 2008 capital expenditure program of $370 million. The plan is comprised of $75 million for upgrade initiatives of existing equipment and infrastructure and $295 million for expansion of its equipment fleet. Most of this expansion capital will go towards the construction of 19 new drilling rigs for the North American market. The first three rigs in this program have been contracted with one customer for work in the Rocky Mountain region of the United States pursuant to a multi-year term with deployment expected to begin in the fourth quarter of 2008.