Precision Drilling Corp. reported Thursday that its second-quarter profit fell sharply due to weak activity in North America, which hurt its revenue for the period.
The Canadian oil and natural gas driller said activity in the region was down from last year due to wet weather in Canada, continuing low natural gas prices and lower levels of customer activity. Precision benefited from international drilling activity.
The quarter's results beat market expectations and its shares jumped in afternoon trading.
Precision's net income fell to 473,000 Canadian dollars ($460,245), or flat on a per share basis. That is compared with 18.3 million Canadian dollars ($17.8 million), or 6 cents per share, for the same quarter a year ago.
Revenue slipped to 378.9 million Canadian dollars ($368.7 million) from 382 million Canadian dollars a year ago. The company said the drop to lower North American activity was partially offset by increased international and directional drilling activity.
Analysts polled by FactSet, on average, expected a loss of a penny per share on revenue of 356.9 million Canadian dollars.
President and CEO Kevin Neveu said that its investment in rigs and fleet repositioning have paid off, reflected in its firm day rates in a competitive market.
Its average service rig revenue per operating hour in the second quarter was $817, which was $83 higher than the second quarter of 2012.Precision said that drilling activity has been lower in Canada and the United States compared to this time last year. Despite the softness, demand for top-tier continues to be strong, which benefits drilling contractors those assets.
The company also said Thursday that it is adding five contracted new build Super Series rigs to its North American drilling fleet, bringing the total number of announced new build rigs in 2013 to six.
The company said it signed an upgrade contract for an existing drilling rig for operations in Mexico. The company said that its capital spending is expected to increase to 654 million Canadian dollars from 533 million Canadian dollars for the year as a result of these commitments.
Shares rose 47 Canadian cents, or 4.7 percent, to 10.39 Canadian dollars in later afternoon trading. Its stock hit a 52-week high of 10.55 Canadian cents earlier in the day.