CALGARY — Precision Drilling Trust’s hard-won acquisition of Grey Wolf Inc. helped boost second-quarter revenue by 51 per cent to $210 million, the oilfield driller announced Wednesday (TSX:PD.UN).
The Calgary-based trust also reported a doubling of net income to $57 million or 22 cents per unit for the quarter ended June 30, compared to $22 million or 16 cents per unit a year ago when revenue was $139 million.
A $43-million increase in finance charges, due largely to the cost of the US$2.1-billion Grey Wolf acquisition last year, was offset by a foreign exchange gain, which totalled $74 million or 20 cents per unit.
Precision Drilling said financing activities during the second quarter enabled the trust to repay some of the debt accrued to buy Grey Wolf, saying it has paid off its bridge facility and reduced annual interest expense.
Precision CEO Kevin Neveu said in a conference call that the trust has “sufficient liquidity to ride out a prolonged industry downturn”
“Clearly today, we do not see any near-term, new build opportunities, and our primary use of cash will be to reduce net debt, reinforce our liquidity and continue the drive towards investment-grade status,” Neveu said.
Among the financing moves in the second quarter was the decision to allow Alberta Investment Management Corp., a Crown corporation that operates independently of the government, to take a 15 per cent stake in the trust through $280 million in financing.
AIMCo invests more than $70 billion on behalf of public sector pension, endowment and other funds.
Precision also completed a US$172-million offering of 46 million trust units in February.
The trust survived a “dismal” spring break-up season in Canada and the apparent bottoming of customer demand in the United States, Neveu said.
But there may be new opportunities over the next 18 months, possibly in shale gas in the Marcellus region of the U.S. and the Utica region in Quebec, he added.
“The current drilling and completion technology has certainly lowered the gas price threshold for many of these emerging areas, and I expect our customers will continue to exploit and expand these resource plays,” he said.
While shale plays in northeastern British Columbia bolstered Precision’s Canadian quarterly results, early indications suggest that Canadian activity will remain depressed and likely won’t show any “meaningful” recovery this year, the trust said.
Precision provides equipment, personnel and support services to the oil and gas industry, including contract drilling rigs, service rigs, camps, snubbing units and wastewater treatment units.
In Wednesday trading on the Toronto Stock Exchange, Precision units rose eight cents to $5.54.