Precision Drilling hikes dividend 17%, reports stronger Q3 profit, revenue

CALGARY – Precision Drilling Corp. (TSX:PD) increased its dividend Monday as it reported strong growth in its third-quarter earnings and revenue.

The oilfield services company said it will raise its quarterly dividend by a penny to seven cents per share.

The increased dividend came as Precision Drilling said it earned $52.8 million or 18 cents per diluted share in its latest quarter, up from $29.4 million or 10 cents per diluted share a year ago.

Revenue increased 19.7 per cent to $584.6 million from $488.4 million in the same quarter last year.

The revenue and earnings were in line with analyst estimates compiled by Thomson Reuters.

Precision Drilling also said Monday that its capital spending plan will come in less than a summer forecast.

It expects its capital budget to total $908 million for the year, down from a plan for $934 million in July, due to the deferral of infrastructure and upgrade projects.

The adjustments follow a drop in the price of crude oil to about US$80 per barrel compared with more than US$100 a barrel in July.

“While overall customer demand may be impacted by further decreases in commodity prices, the demand for our Super Series fleet is expected to remain strong as a result of the value generated by these rigs,” Precision Drilling president and CEO Kevin Neveu said in a statement.

“We are encouraged by steps taken last week by the British Columbia government to improve the tax structure for (liquefied natural gas) investment and we continue to closely monitor the capital decisions of major operators as we expect to be a key service provider and partner in developing this important Canadian resource base.” .

Neveu also said the United States has been its biggest source of growth and where it expects to expand its presence.

Precision Drilling is the first of Canada’s major oilfield services companies to report quarterly results. Other drilling companies that are set to report over the coming weeks include Trinidad Drilling (TSX:TDG) on Nov. 5 and Ensign Energy Services (TSX:ESI) on Nov. 10.

RBC Capital Markets analyst Dan MacDonald writes that stock prices in the sector will primarily be driven by commodity prices, which have been volatile.

“On the whole, we think it is too early for service providers to have insights into their clients’ 2015 spending plans, although management commentary is likely to be cautious,” MacDonald wrote.