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 July 28, 2005
Commission File Number: 001-14534
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
-------
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: July 28, 2005
Calgary, Alberta, Canada - July 28, 2005
PRECISION DRILLING CORPORATION ANNOUNCES
RESULTS FOR THE SECOND QUARTER
Precision Drilling Corporation ("Precision" or the "Corporation") announced
today that net earnings for the second quarter of 2005 was $25.9 million or
$0.21 per diluted share, compared to $16.0 million or $0.14 per diluted share
for the second quarter of 2004. Net earnings from continuing operations was $9.3
million or $0.07 per diluted share compared to $10.1 million or $0.09 per
diluted share in 2004.
During the quarter, the Corporation entered into a definitive agreement to sell
its Energy Services and International Contract Drilling divisions for
approximately US$2.28 billion with the transaction expected to close on or about
September 1, 2005. The Corporation is also negotiation with a third party for
the sale of its industrial and plant maintenance business carried on by CEDA. As
a result, these businesses have been classified as discontinued operations with
continuing operations now being comprised of Canadian contract drilling, service
rig, snubbing, rentals, and related services businesses.
With respect to the continuing businesses, the Corporation announced in June
2005 that it was undertaking an examination of the available strategic
alternatives, including determining the viability and method of conversion to an
income trust. Although the Board of Directors has not made any decision with
respect to any specific course of action at this time, it has retained the
appropriate financial, accounting, legal and tax advisors to assist it in
identifying and assessing issues pertaining to a conversion to an income trust.
Any conversion alternatives available to Precision will be subject to review by,
and approval of the Board of Directors and will also be subject to receipt of
all required shareholder and regulatory approvals.
RESULTS OF CONTINUING OPERATIONS
THREE MONTHS ENDED JUNE 30, 2005 2004 % Change
------------------------------------------------------------------------------------------------------------
Number of drilling rigs (end of period) 229 225 1.8
Drilling operating days 6,049 5,279 14.6
Drilling revenue per operating day 16,578 15,561 6.5
Number of service rigs (end of period) 239 239 -
Service rig operating hours 72,814 80,986 (10.1)
Service revenue per operating hour 530 458 15.7
=============================================================================================================
SIX MONTHS ENDED JUNE 30, 2005 2004 % Change
------------------------------------------------------------------------------------------------------------
Number of drilling rigs (end of period) 229 225 1.8
Drilling operating days 20,048 20,047 -
Drilling revenue per operating day 17,951 16,506 8.7
Number of service rigs (end of period) 239 239 -
Service rig operating hours 212,488 231,679 (8.3)
Service revenue per operating hour 576 507 13.6
=============================================================================================================
As usual in the second quarter, weather conditions were a significant factor
affecting activity levels. An early spring break-up and dry conditions in May
were boding well for a very strong second quarter. These favorable conditions
came to an abrupt halt in June as record rainfall in Alberta slowed the movement
of oilfield equipment.
Demand for all services remains very strong with winter rates being maintained
for the most part throughout the second quarter. The healthy backlog of work
should give service providers pricing leverage going into the upcoming winter
season.
Operating costs have escalated somewhat as a result of crew wage increases
implemented in October 2004 and increases in third party materials and labor
required for equipment maintenance programs. General and administrative costs
have increased year over year due to a number of factors including increased
expense associated with options granted in the last half of 2004, financial
advisory and legal fees, severance costs and additional expenses related to both
internal and external audit functions.
The effective tax rate has increased in 2005 as a result of the increased
options expense, which is not deductible for tax purposes, and as a result of a
tax law change in the second quarter that was effective January 1, 2005.
CERTAIN STATEMENTS CONTAINED IN THIS PRESS RELEASE MAY CONTAIN WORDS SUCH AS
"ANTICIPATE", "COULD", "SHOULD", "EXPECT", "BELIEVE", "WILL" AND SIMILAR
EXPRESSIONS AND STATEMENTS RELATING TO MATTERS THAT ARE NOT HISTORICAL FACTS.
THESE STATEMENTS ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE 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 REGULATIONS, TO WHICH
PRECISION IS SUBJECT AND OTHER FACTORS, WHICH ARE DESCRIBED IN FURTHER DETAIL IN
PRECISION'S FILINGS WITH THE US SECURITIES AND EXCHANGE COMMISSION.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
CDN $000'S, EXCEPT PER SHARE AMOUNTS (UNAUDITED) 2005 2004 2005 2004
--------------------------------------------------------------------------------------------------------------------------
Revenue $ 157,895 $ 134,963 $ 541,302 $ 496,487
Expenses:
Operating 101,580 92,253 291,113 279,133
General and administrative 20,215 12,031 40,009 31,009
Depreciation and amortization 11,804 11,779 33,173 35,721
Foreign exchange (209) (5,165) (518) (5,011)
----------------------------------------------------------------------------------------------------------------------
133,390 110,898 363,777 340,852
--------------------------------------------------------------------------------------------------------------------------
Operating earnings 24,505 24,065 177,525 155,635
Interest 10,802 10,257 22,341 18,201
Gain on disposal of investments - (42) - (42)
--------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income
taxes: 13,703 13,850 155,184 137,476
Income taxes:
Current 662 13,755 44,687 34,014
Future 3,733 (10,032) 12,908 12,908
---------------------------------------------------------------------------------------------------------------------
4,395 3,723 57,595 46,922
--------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 9,308 10,127 97,589 90,554
Discontinued operations, net of tax 16,543 5,868 66,780 25,960
--------------------------------------------------------------------------------------------------------------------------
Net earnings 25,851 15,995 164,369 116,514
Retained earnings, beginning of period 1,180,201 894,798 1,041,683 794,279
==========================================================================================================================
Retained earnings, end of period $ 1,206,052 $ 910,793 $ 1,206,052 $ 910,793
==========================================================================================================================
Earnings per share from continuing operations:
Basic $ 0.08 $ 0.09 $ 0.80 $ 0.81
Diluted $ 0.07 $ 0.09 $ 0.78 $ 0.80
==========================================================================================================================
Earnings per share:
Basic $ 0.21 $ 0.14 $ 1.34 $ 1.05
Diluted $ 0.21 $ 0.14 $ 1.32 $ 1.03
==========================================================================================================================
Common shares outstanding (000's) 122,762 111,817 122,762 111,817
Weighted average shares outstanding (000's) 122,727 111,741 122,521 111,353
Diluted shares outstanding (000's) 125,013 113,098 124,765 112,858
CONSOLIDATED BALANCE SHEETS
JUNE 30, December 31,
CDN $000'S 2005 2004
---------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 306,538 $ 122,012
Accounts receivable 207,543 309,292
Income taxes recoverable 1,793 -
Inventory 6,711 7,734
Assets of discontinued operations 541,148 497,036
-----------------------------------------------------------------------------------------------------------------
1,063,733 936,074
Property, plant and equipment, net of accumulated depreciation 927,592 897,584
Intangibles, net of accumulated amortization 511 498
Goodwill 266,827 266,827
Other assets 8,200 9,116
Assets of discontinued operations 1,742,143 1,741,950
---------------------------------------------------------------------------------------------------------------------
$ 4,009,006 $ 3,852,049
=====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 92,513 $ 120,432
Income taxes payable - 13,624
Liabilities of discontinued operations 234,511 244,727
-----------------------------------------------------------------------------------------------------------------
327,024 378,783
Long-term debt 719,240 718,850
Future income taxes 367,176 354,268
Future income taxes of discontinued operations 75,110 78,407
Shareholders' equity:
Share capital 1,301,886 1,274,967
Contributed surplus 33,631 26,024
Cumulative translation adjustment (21,113) (20,933)
Retained earnings 1,206,052 1,041,683
-----------------------------------------------------------------------------------------------------------------
2,520,456 2,321,741
---------------------------------------------------------------------------------------------------------------------
$ 4,009,006 $ 3,852,049
=====================================================================================================================
Common shares outstanding (000's) 122,762 121,580
Common share purchase options outstanding (000's) 5,858 6,695
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
CDN $000'S (UNAUDITED) 2005 2004 2005 2004
--------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in):
Continuing operations:
Earnings from continuing operations $ 9,308 $ 10,127 $ 97,589 $ 90,554
Items not affecting cash:
Stock-based compensation 2,684 1,414 5,464 2,943
Depreciation and amortization 11,804 11,779 33,173 35,721
Gain on disposal of investments - (42) - (42)
Future income taxes 3,733 (10,032) 12,908 12,908
Amortization of deferred financing costs 458 360 917 680
Unrealized foreign exchange gain on
long-term monetary items (14) (2,568) (3) (2,220)
--------------------------------------------------------------------------------------------------------------------------
Funds provided by continuing operations 27,973 11,038 150,048 140,544
Changes in non-cash working capital balances 89,749 175,671 59,436 94,822
--------------------------------------------------------------------------------------------------------------------------
117,722 186,709 209,484 235,366
Discontinued operations:
Funds provided by discontinued operations 59,633 27,709 142,547 74,801
Changes in non-cash working capital balances of
discontinued operations 28,880 (18,447) (48,264) (40,244)
--------------------------------------------------------------------------------------------------------------------------
88,513 9,262 94,283 34,557
Investments:
Business acquisitions - (658,212) - (658,842)
Purchase of property, plant and equipment (88,490) (55,253) (161,450) (108,981)
Purchase of intangibles - - (20) -
Proceeds on sale of property, plant and 8,609 6,533 17,121 11,246
equipment
Proceeds on disposal of investments - 48 - 48
Proceeds on disposal of discontinued operations - 15,000 - 40,746
Investments - (1,340) - (1,340)
----------------------------------------------------------------------------------------------------------------------
(79,861) (693,224) (144,349) (717,123)
Financing:
Increase in long-term debt - 520,873 - 522,136
Repayment of long-term debt (5) (6,898) (9) (11,263)
Deferred financing costs on long-term debt - (4,985) - (4,985)
Issuance of common shares on exercise of options 2,626 6,236 25,117 36,771
Change in bank indebtedness - 2,533 - (76,114)
----------------------------------------------------------------------------------------------------------------------
2,621 517,759 25,108 466,545
--------------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 128,975 20,506 184,526 19,345
Cash and cash equivalents, beginning of period 177,563 20,209 122,012 21,370
--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 306,538 $ 40,715 $ 306,538 $ 40,715
==========================================================================================================================
CANADIAN DRILLING OPERATING STATISTICS
FOR THE SIX MONTHS ENDED JUNE 30,
2005 2004
----------------------------------------------------------------------
Market Market
Precision Industry* Share % Precision Industry* Share %
----------------------------------------------------------------------
Number of drilling rigs 229 732 31.3 225 683 32.9
Number of operating days (spud to release) 20,048 65,453 30.6 20,047 63,753 31.4
Wells drilled 3,504 10,126 34.6 3,530 9,964 35.4
Average days per well 5.7 6.5 5.7 6.4
Metres drilled (000's) 3,936 11,698 33.6 3,799 10,882 34.9
Average metres/day 196 179 190 171
Average metres/well 1,123 1,155 1,076 1,092
Rig utilization rate (%) 48.4 50.4 48.9 51.6
* Excludes non-CAODC rigs.
A conference call to review the second quarter 2005 results has been scheduled
for 12:00 noon MST on Thursday, July 28, 2005. The conference call dial-in
number is 1-800-814-4941.
A live webcast will be accessible at WWW.PRECISIONDRILLING.COM by selecting
Investor Relations.
FOR FURTHER INFORMATION, PLEASE CONTACT HANK B. SWARTOUT, CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, 4200, 150 6TH AVENUE S.W., CALGARY, ALBERTA T2P
3Y7, TELEPHONE: (403) 716-4500, FAX: (403) 264-0251; WEBSITE:
WWW.PRECISIONDRILLING.COM.