Precision Drilling(US:PDS)2025-03-10 20:05Financial Performance - In 2024, the company's revenue decreased by 1.8% to $1,902 million, primarily due to decreased drilling activity and lower revenue per utilization day rates in the U.S.[84] - Adjusted EBITDA for 2024 was $521 million, a 14.7% decrease from 2023, attributed to lower U.S. drilling results and higher share-based compensation charges[84][93] - The company reported a net earnings loss of $111.3 million in 2024, a 61.5% decrease compared to 2023[84] - Net earnings attributable to shareholders decreased to $111 million or $7.81 per share, down from $289 million or $21.03 per share in the prior year[94] - Revenue from Contract Drilling Services was $1,618 million, a 5% decrease compared to 2023, primarily due to lower U.S. revenue per utilization day rates and drilling activity[116] - Adjusted EBITDA for 2024 was $532 million, down from $631 million in 2023, reflecting weaker U.S. drilling results[119] Debt Management - In 2024, Precision reduced debt by $176 million, repurchased $75 million of shares, and increased cash balance by $20 million, achieving a Net Debt to Adjusted EBITDA ratio of approximately 1.4 times[17] - Precision plans to reduce debt by at least $100 million in 2025 and aims for a total reduction of $700 million between 2022 and 2027[81] - The company aims to achieve a sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times in 2025[20] - Debt was reduced by $176 million in 2024, including $113 million from unsecured senior note redemptions[96] - Long-term debt repayments amounted to $176 million, with $75 million allocated for NCIB share repurchases[166] Operational Performance - Canadian drilling utilization days increased by 12% over 2023, while international drilling utilization days rose by 37% following the reactivation of four rigs[18] - Well servicing rig operating hours increased by 26% year-over-year, with Completion and Production Services revenue up by 23% and Adjusted EBITDA up by 30%[18] - Increased Canadian drilling activity by 12% year over year, with international activity up 37%[42] - U.S. drilling activity fell by approximately 28% in 2024, while Canadian activity increased by 12% and international activity rose by 37%[93] - The contract drilling rig fleet remained stable at 214 rigs, with utilization days in Canada increasing by 12% to 23,685 days[85] Strategic Initiatives - Precision's strategic priorities for 2024 included generating free cash flow and increasing direct capital returns to shareholders[41] - Established strategic priorities for 2025, including maximizing free cash flow and enhancing shareholder returns through debt reduction[43] - The company operates a fleet of 214 land drilling rigs, with 97 in Canada, 104 in the U.S., and 13 in the Middle East[31] - Approximately 80% of Super Triple rigs are equipped with AlphaTM technologies, enhancing drilling performance and cost efficiencies[32] Market Conditions - The average West Texas Intermediate oil price in 2024 was $75.73 per barrel, a 2% decrease from 2023[49] - The average WTI oil price in 2024 was $75.73 per barrel, a 2% decrease from 2023, while Henry Hub natural gas prices averaged $2.41 per MMBtu, a 10% decrease[91] - The long-term outlook for global energy demand remains positive, with significant increases expected in oil and natural gas driven by economic growth and emerging power demands[73] - Global military and political conditions, along with economic factors, can significantly affect supply and demand for oil and natural gas[203] - The volatility of crude oil and natural gas prices accounts for much of the cyclical nature of the oilfield services business in recent years[201] Cash Flow and Liquidity - Delivered $482 million in cash provided by operations, increasing cash balance by $20 million[42] - The company maintained a strong liquidity position, exiting 2024 with a cash balance of $74 million and over $575 million in available liquidity[151] - Cash provided by operations in 2024 was $482 million, down from $501 million in 2023, influenced by lower U.S. drilling results and higher share-based compensation[161] - Cash used in financing activities increased to $261 million in 2024 from $252 million in 2023[164] Capital Expenditures - Invested $52 million in expansion and upgrade capital to enhance drilling rigs[42] - The company expects capital spending in 2025 to be $225 million, with $175 million allocated for maintenance and $50 million for expansion and upgrades[80] - Capital expenditures for property, plant, and equipment were $217 million, a decrease of $10 million from 2023[98] - Capital expenditures in 2024 totaled $217 million, with a portion allocated for expansion and upgrade capital for new-build projects[162] Partnerships and Collaborations - A partnership was formed with two Indigenous partners, with Precision contributing $4 million in assets[101]