Achi news desk-
The completion of the Trans Mountain pipeline expansion is leading to increased demand for drilling services, said Precision Drilling chief executive Kevin Neveu.
The contract driller is seeing demand exceeding its expectations, it said on an earnings call Thursday, as the expansion of the crude oil pipeline to the West Coast nears the May 1 start of commercial operations.
“Do we see customer interest increasing in anticipation of the Cross Mountain business starting? The answer is yes very much.”
The company has 48 rigs currently operating where it had 38 last year, and expects demand to continue. He also expects a boost to well-served contracts.
“We see this momentum continuing throughout the summer and exceeding our previous view on Canadian rig demand,” Neveu said.
The growth is helping to offset a retreat in the United States, where activity is quieter due to weak natural gas prices and operator consolidation, he said.
The company reported 38 active drilling rigs in the US for its first quarter compared to 60 for the first quarter of 2023.
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In Canada, Precision averaged 73 active drilling rigs for the quarter, compared to 69 a year earlier.
The drop in US activity helped lead its first quarter profit to come in at $36.5 million, down from $95.8 million a year ago.
The company says earnings totaled $2.53 per diluted share for the quarter ended March 31, down from $5.57 per diluted share at the same time last year.
Revenue totaled $527.8 million, down from $558.6 million in the first quarter of 2023.
The company is focused on reducing costs, paying down debt and returning profits to shareholders, Neveu said.
Precision is also investing in automated rig technology which may mean that future increases in demand will not lead to as much of a boom in employment.
The system has several more months of field hardening before it is commercially ready, but so far it is working better than expected, Neveu said.
“We will eliminate human work from the red zone on the rig floor and in the mast, while ensuring safe, consistent, predictable and highly efficient rig floor performance for our customers.”
& copy 2024 The Canadian Press
