Precision Drilling reaches agreement with CRA over disputed tax reassessment

CALGARY – Precision Drilling Corp. (TSX:PD) has reached agreement with the Canada Revenue Agency over a disputed tax reassessment.

Canada’s largest oilfield services company said Tuesday it will pay $37 million to the CRA, instead of an initial reassessment totalling $216 million.

The announcement comes after Precision disputed the CRA’s reassessment of a transaction made in 2005.

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While Precision disputed the reassessment from the start, it was required to pay $108 million while it appealed.

The company said it anticipates paying $26 million in federal tax plus interest of $11 million, which means it will receive a refund of $71 million.

Precision said it expects to pay $13 million in related taxes to the Alberta government.

“We believe the settlement, which eliminates a potentially significant tax liability, is in the best long-term interests of Precision and its shareholders,” said president and CEO Rob McNally in a release.

The company also expects to book a $50 million one-time charge related to the settlement during the third quarter.