Precision Drilling Corp shares have surged after the company reported its fourth-quarter FY23 results.
Key Highlights
Despite a 0.7% decrease in revenues to C$506.9 million, the company has seen diverging trends in its key service segments. Contract Drilling Services revenue declined 1.5%, while Completion and Production Services revenue grew by 5.4% year over year to C$62.5 million. On the operational front, drilling rig utilization in the U.S. fell by 25% and by 3% in Canada, whereas international drilling rig utilization days rose significantly by 26%.
One of the most notable metrics is Precision Drilling’s adjusted EBITDA, which grew to C$151.2 million from C$91.1 million in the quarter. EPS also experienced a substantial surge to C$9.81, compared to C$0.27 a year ago. Operating cash flow increased to C$170.3 million, and the company revealed a rise in capital expenditures to C$79 million from C$57 million a year ago.
The company also provided insight into its active rigs, with 45 in the U.S., 64 in Canada, and 8 internationally. Kevin Neveu, President and CEO, revealed that international operations are set to significantly expand with a 40% year-over-year activity increase and predictable cash flow from long-term contracts that extend into 2027 and 2028.
Future Outlook
Precision Drilling Corp has set ambitious goals for debt reduction, targeting a decrease of C$150 million to C$200 million in 2024, with 25% to 35% of free cash flow before debt repayments allocated towards share repurchases. Additionally, the company aims to decrease debt by another C$100 million by the end of 2026 and continue returning 50% of free cash flow to shareholders.
The company also projects a noteworthy 40% year-over-year increase in its average active international rig count in the year ahead.
Precision Drilling Corp’s shares surged by 9.53% to $64.58 at the last check on Tuesday, reflecting market optimism following the impressive quarterly results and upbeat future outlook.
