Precision Drilling, a leading Canadian drilling rig contractor, has announced its fourth-quarter earnings, revealing a significant increase in profit. Despite a slight decline in revenue, the company’s cash generation remains strong, which will support debt repayments and shareholder returns moving forward.
Impressive Financial Performance
For the fourth quarter, Precision Drilling recorded a net income of 146.7 million Canadian dollars ($108.3 million), or C$9.81 per share. This demonstrates substantial growth compared to the same quarter last year when the net income was only C$3.5 million, or C$0.27 per share.
While revenue did decline slightly to C$506.9 million from C$510.5 million, the decrease was less than expected. Analysts had predicted a steeper decline to C$489.5 million, according to FactSet.
Factors Driving Success
There were several key factors that contributed to Precision Drilling’s strong performance. In Canada, the company saw a 16% rise in revenue per rig-utilization-day, amounting to C$34,616. Similarly, in the United States, there was a 10% increase to $34,452.
Internationally, Precision Drilling expanded its presence by adding a new rig in the Middle East during the quarter, bringing the total number of active rigs in the region to eight under term contracts. The company expects further growth, projecting a 40% increase in the average active international rig count from 2023 levels.
Kevin Neveu, the Chief Executive of Precision Drilling, expressed optimism regarding the company’s future prospects. Following their most profitable year in the past decade, Precision Drilling aims to reduce its debt by an additional C$100 million by the end of 2026. Additionally, they plan to prioritize shareholder capital returns, aiming to allocate 50% of their free cash flow towards this purpose.
Precision Drilling’s impressive fourth-quarter results demonstrate its ability to adapt and thrive within the industry. With a focus on debt reduction and shareholder returns, the company remains poised for continued success in the coming years.