Precision Drilling Corp. saw its fourth-quarter revenue increase by 73 per cent year-over-year, as North American oil and gas drilling activity continues to pick up.
The Calgary-based company, which is Canada’s largest drilling rig contractor, reported a fourth-quarter profit Thursday of $3.5 million, compared with a loss of $27.3 million a year ago.
The profit amounted to 27 cents per diluted share for the period ended Dec. 31 compared with a loss of $2.05 per diluted share in the last three months of 2021.
Its revenue for the period totalled $510.5 million, up from $295.2 million a year earlier.
READ MORE: Precision Drilling reports Q3 profit, revenue up 69% from year ago
“Looking back not too long ago, there was a period in 2020 early in the pandemic that many questioned the survivability of our industry and of Precision,” said company CEO Kevin Neveu, on a conference call with analysts.
“Despite those challenging times, our people stayed focused… The momentum we created during that period has served Precision well as the industry rebounded in 2021 and 2022, and the rebound continues in 2023.”
During the fourth quarter, Precision’s North American drilling activity and day rates continued to improve. Drilling rig utilization days increased 31 per cent in the U.S. and 26 per cent in Canada compared with 2021.
Neveu said day rates, which have climbed for five consecutive quarters, reached highs of US$31,242 in the U.S. and $29,886 in Canada in the fourth quarter. He said Precision expects to be able to continue to push its rates higher in the year ahead, due to forecast demand for drilling activity.
The Canadian Association of Energy Contractors (CAOEC) has said it expects 6,409 wells to be drilled in Canada in 2023, an approximately 15 per cent increase from 2022.
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While Neveu acknowledged the risk of potential economic recession and the impact that would have on commodity prices and drilling activity, he said customer demand looks strong for the balance of 2023 and beyond.
One reason for optimism, Neveu said, is the province of B.C.’s recent historic deal with the Blueberry River First Nation, which put an end to a 19-month court-ordered freeze on new oil and gas development in the Montney region of northern B.C.
Neveu said Precision is also seeing customers making plans for new drilling programs “likely targeting future LNG exports.” The Coastal GasLink pipeline, which will carry natural gas across B.C. to the LNG Canada processing and export facility currently under construction in Kitimat, is expected to be completed this year, while the Trans Mountain pipeline expansion, which will increase Canadian oil export capacity, is also nearing completion.
Precision said it has 78 rigs active in Canada today, representing an 18 per cent increase over the same time last year, and 61 rigs active in the U.S. — a 17 per cent increase over last year.