UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13A-16 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For February 13, 2003
Commission File Number:
PRECISION DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
4200, 150 - 6TH AVENUE S.W.
CALGARY, ALBERTA
CANADA T2P 3Y7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [_] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1).
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
Note: Regulation S-T Rule 101(b)(7) only permits the submission in
paper of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRECISION DRILLING CORPORATION
Per: /s/ Jan M. Campbell
---------------------------------------
Jan M. Campbell
Corporate Secretary
Date: February 13, 2003
Calgary, Alberta, Canada - February 13, 2003
YEAR-END RESULTS - DECEMBER 31, 2002
Precision Drilling Corporation ("Precision" or the "Corporation") today reports
results for the year ended December 31, 2002. Revenue for the year decreased 14%
to $1.69 billion while diluted earnings per share decreased to $1.66 from $4.03
in 2001. Fourth quarter diluted earnings per share of $0.16 was in line with
previously announced expectations.
The 2001 comparative numbers have been restated to give effect to the
retroactive application of the new Canadian accounting standard for foreign
exchange gains and losses on translation of US dollar denominated long-term
debt. The new standard, which is consistent with US practice, resulted in a
decrease in earnings per share of $0.03 for the twelve-month period ended
December 31, 2002 with no effect on the fourth quarter.
Canadian oilfield service activity was lower than expected to begin the fourth
quarter but improved significantly during December with the strength continuing
into 2003. The US market continued to be weak with drilling activity remaining
consistent with the third quarter. Revenue generated in international markets
also remained relatively unchanged from the third quarter.
In the Contract Drilling Group, revenue for the fourth quarter was $190.0
million compared to $226.7 million in the previous year, a 16% decline. The 10%
decline in year over year Canadian drilling activity was accompanied by a
similar erosion of pricing. International drilling revenue declined slightly in
the fourth quarter of 2002 relative to 2001. Activity in Venezuela was curtailed
due to the political unrest in that country, with this decline being largely
offset by additional rigs working in Mexico. Both activity and pricing for well
servicing also declined by approximately 5%.
The Technology Services Group continued to be burdened by the cost of service
delivery and support structures with capacity greater than required for current
revenue levels, particularly in international markets. Rationalization of
operations and capital investment in this segment will be our focus in the
months ahead. The company is committed to achieving profitability in all product
lines and regions in 2003.
We are very pleased with the continued success of the field test program for the
new Revolution(TM) 4 3/4-inch rotary steerable system. The Corporation's new
HEL(TM) measurement-while-drilling system is currently being used on jobs in
Canada, the US, Mexico and Indonesia. This utilization is proving invaluable in
refining the tool's capabilities and reliability. Finally, demand for the
Precision EMpulse(TM) electromagnetic measurement-while-drilling system is
strong with this technology making increasing contributions to revenue.
Revenue in the Rental and Production segment was down slightly from $64.1
million in the fourth quarter of 2001 to $59.5 million in 2002. Declines were
experienced in each of the oilfield equipment rental, gas compression packaging
and industrial plant maintenance businesses.
Although challenging, 2002 was the Corporation's third best in terms of revenue
and fourth best bottom line performance with net earnings of $91.3 million.
Maintenance of our strong balance sheet helps ensure stability and supports
future growth. The Corporation is well positioned to capitalize on strong
Canadian oilfield services activity levels and is cautiously optimistic of the
prospects for improving US and international markets.
Certain statements contained in this press release, including statements which
may contain words such as "could", "should", "expect", "believe", "will" and
similar expressions and statements relating to matters that are not historical
facts are forward-looking statements. Such forward-looking statements involve
known and unknown risks and uncertainties which may cause the actual results,
performances or achievements of Precision to be materially different from any
future results, performances or achievements expressed or implied by such
forward-looking statements. Such factors include fluctuations in the market for
oil and gas and related products and services; competition; political and
economic conditions in countries in which Precision does business; the demand
for services provided by Precision; changes in laws and regulations, including
environmental, to which Precision is subject and other factors, which are
described in further detail in Precision's filings with the Securities and
Exchange Commission.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
CDN $000'S, EXCEPT PER SHARE AMOUNTS 2002 2001 2002 2001
---------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited (restated)
- restated)
Revenue $ 394,252 $ 455,975 $ 1,689,150 $ 1,953,563
Expenses:
Operating 293,081 296,031 1,190,991 1,238,864
General and administrative 39,596 38,219 158,490 153,498
Depreciation and amortization 37,330 36,184 141,429 145,120
Research and engineering 9,584 10,006 34,862 32,440
Foreign exchange (56) 1,752 4,357 2,009
------------------------------------------------------------------------------------------------------------------
379,535 382,192 1,530,129 1,571,931
---------------------------------------------------------------------------------------------------------------------
Operating earnings 14,717 73,783 159,021 381,632
Interest 9,060 8,846 35,236 43,582
Dividend income - - (39) (1,106)
Gain on disposal of investments 100 (449) (900) (1,805)
---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes, goodwill
amortization and non-controlling 5,557 65,386 124,724 340,961
interest
Income taxes:
Current 1,207 8,932 69,288 25,753
Future (4,606) 13,917 (36,980) 96,021
-----------------------------------------------------------------------------------------------------------------
(3,399) 22,849 32,308 121,774
---------------------------------------------------------------------------------------------------------------------
Earnings before non-controlling interest
and 8,956 42,537 92,416 219,187
goodwill amortization
Non-controlling interest 93 868 1,151 868
---------------------------------------------------------------------------------------------------------------------
Earnings before goodwill amortization 8,863 41,669 91,265 218,319
Goodwill amortization, net of tax - 7,965 - 31,785
---------------------------------------------------------------------------------------------------------------------
Net earnings 8,863 33,704 91,265 186,534
Retained earnings, beginning of period 611,221 495,115 528,819 342,285
---------------------------------------------------------------------------------------------------------------------
Retained earnings, end of period $ 620,084 $ 528,819 $ 620,084 $ 528,819
=====================================================================================================================
Earnings per share before goodwill
amortization:
Basic $ 0.16 $ 0.78 $ 1.70 $ 4.12
Diluted $ 0.16 $ 0.78 $ 1.66 $ 4.03
---------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.16 $ 0.63 $ 1.70 $ 3.52
Diluted $ 0.16 $ 0.63 $ 1.66 $ 3.44
=====================================================================================================================
Common shares outstanding (000's) 54,067 53,176 54,067 53,176
Weighted average shares outstanding (000's) 54,006 53,157 53,702 52,953
Diluted shares outstanding (000's) 55,121 53,758 54,815 54,198
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 DECEMBER 31
CDN $ 000'S 2002 2001
---------------------------------------------------------------------------------------------
(restated)
ASSETS
Current assets:
Cash $ 17,315 $ 13,231
Accounts receivable 443,799 474,528
Income taxes recoverable 7,804 --
Inventory 132,909 111,393
-----------------------------------------------------------------------------------------
601,827 599,152
Property, plant and equipment, net of accumulated depreciation 1,521,444 1,418,609
Intangibles, net of accumulated amortization 72,380 74,004
Goodwill 546,921 545,377
Other assets 17,443 14,216
---------------------------------------------------------------------------------------------
$2,760,015 $2,651,358
=============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 95,321 $ 85,384
Accounts payable and accrued liabilities 268,568 253,342
Income taxes payable -- 12,764
Current portion of long-term debt 27,682 31,743
-----------------------------------------------------------------------------------------
391,571 383,233
Long-term debt 514,878 496,200
Future income taxes 318,547 355,078
Non-controlling interest 2,019 868
Shareholders' equity:
Share capital 912,916 887,160
Retained earnings 620,084 528,819
-----------------------------------------------------------------------------------------
1,533,000 1,415,979
---------------------------------------------------------------------------------------------
$2,760,015 $2,651,358
=============================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
CDN $000'S, EXCEPT PER SHARE AMOUNTS 2002 2001 2002 2001
-----------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited (restated)
- restated)
Cash provided by (used in):
Operations:
Net earnings $ 8,863 $ 33,704 $ 91,265 $ 186,534
Items not affecting cash:
Depreciation and amortization 37,330 36,184 141,429 145,120
Goodwill amortization - 7,965 - 31,785
Gain on disposal of investments 100 (449) (900) (1,805)
Future income taxes (4,606) 13,917 (36,980) 96,021
Non-controlling interest 93 868 1,151 868
Amortization of deferred financing costs 323 324 1,294 1,302
Unrealized foreign exchange loss (gain) on
long-term debt (2,052) 771 (2,488) 5,848
-----------------------------------------------------------------------------------------------------------------
Funds provided by operations 40,051 93,284 194,771 465,673
Changes in non-cash working capital balances (12,333) 46,226 4,452 (33,443)
-----------------------------------------------------------------------------------------------------------------------
27,718 139,510 199,223 432,230
Investments:
Business acquisitions, net of cash required (1,544) (3,302) (4,594) (35,557)
Purchase of property, plant and equipment (101,431) (124,254) (267,794) (366,019)
Purchase of intangibles (2,049) 89 (4,198) (5,673)
Proceeds on sale of property, plant and
equipment 6,761 11,678 32,449 31,001
Proceeds on disposal of investments - 571 1,872 2,283
Investments (5,525) 972 (5,672) 227
-------------------------------------------------------------------------------------------------------------------
(103,788) (114,246) (247,937) (373,738)
Financing:
Increase in long-term debt 84,754 5,116 119,380 22,083
Repayment of long-term debt (9,836) (19,917) (102,275) (83,437)
Deferred financing costs - - - (38)
Issuance of common shares 3,905 2,060 25,756 22,665
Change in bank indebtedness (9,554) 708 9,937 (27,236)
-------------------------------------------------------------------------------------------------------------------
69,269 (12,033) 52,798 (65,963)
-----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (6,801) 13,231 4,084 (7,471)
Cash, beginning of period 24,116 - 13,231 20,702
-----------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 17,315 $ 13,231 $ 17,315 $ 13,231
=======================================================================================================================
Funds provided by operations per share:
Basic $ 0.74 $ 1.75 $ 3.63 $ 8.79
Diluted $ 0.73 $ 1.74 $ 3.55 $ 8.59
=======================================================================================================================
SEGMENT INFORMATION
CONTRACT TECHNOLOGY RENTAL AND
THREE MONTHS ENDED DECEMBER 31, 2002 DRILLING SERVICES PRODUCTION CORPORATE
CDN $000'S (UNAUDITED) GROUP GROUP GROUP AND OTHER TOTAL
------------------------------------------------------------------------------------------------------------------------
Revenue $ 189,994 $ 144,611 $ 59,475 $ 172 $ 394,252
Operating earnings 39,549 (24,864) 6,469 (6,437) 14,717
Research and engineering - 9,584 - - 9,584
Depreciation and amortization 16,216 16,231 3,759 1,124 37,330
Total assets 1,312,459 1,127,550 240,842 79,164 2,760,015
Goodwill 257,531 251,589 37,801 - 546,921
Capital expenditures* 21,152 67,763 7,399 7,166 103,480
------------------------------------------------------------------------------------------------------------------------
CONTRACT TECHNOLOGY RENTAL AND
THREE MONTHS ENDED DECEMBER 31, 2001(1) DRILLING SERVICES PRODUCTION CORPORATE
CDN $000'S (UNAUDITED) GROUP GROUP GROUP AND OTHER TOTAL
------------------------------------------------------------------------------------------------------------------------
Revenue $ 226,743 $ 164,720 $ 64,076 $ 436 $ 455,975
Operating earnings 70,643 927 9,274 (7,061) 73,783
Research and engineering - 10,006 - - 10,006
Depreciation and amortization 16,207 15,108 3,882 987 36,184
Total assets 1,367,682 987,061 241,044 55,571 2,651,358
Goodwill 257,531 250,045 37,801 - 545,377
Capital expenditures* 37,813 79,585 6,568 199 124,165
------------------------------------------------------------------------------------------------------------------------
CONTRACT TECHNOLOGY RENTAL AND
TWELVE MONTHS ENDED DECEMBER 31, 2002 DRILLING SERVICES PRODUCTION CORPORATE
CDN $000'S GROUP GROUP GROUP AND OTHER TOTAL
------------------------------------------------------------------------------------------------------------------------
Revenue $ 773,949 $ 639,367 $ 274,403 $ 1,431 $ 1,689,150
Operating earnings 183,400 (40,646) 43,618 (27,351) 159,021
Research and engineering - 34,862 - - 34,862
Depreciation and amortization 63,045 58,935 15,095 4,354 141,429
Total assets 1,312,459 1,127,550 240,842 79,164 2,760,015
Goodwill 257,531 251,589 37,801 - 546,921
Capital expenditures* 50,686 189,092 22,346 9,868 271,992
------------------------------------------------------------------------------------------------------------------------
TWELVE MONTHS ENDED DECEMBER 31, CONTRACT TECHNOLOGY RENTAL AND
2001(1) DRILLING SERVICES PRODUCTION CORPORATE
CDN $000'S GROUP GROUP GROUP AND OTHER TOTAL
------------------------------------------------------------------------------------------------------------------------
Revenue $ 1,010,020 $ 669,439 $ 271,880 $ 2,224 $ 1,953,563
Operating earnings 298,100 60,428 51,678 (28,574) 381,632
Research and engineering - 32,440 - - 32,440
Depreciation and amortization 75,511 51,656 14,934 3,019 145,120
Total assets 1,367,682 987,061 241,044 55,571 2,651,358
Goodwill 257,531 250,045 37,801 - 545,377
Capital expenditures* 122,575 203,547 27,352 18,218 371,692
------------------------------------------------------------------------------------------------------------------------
*excludes acquisitions
(1) Certain expenses have been reclassified between segments to more
appropriately reflect operating earnings.
CANADIAN DRILLING OPERATING STATISTICS
FOR THE TWELVE MONTHS ENDED DECEMBER 31,
----------------------------------------
2002 2001
---------------------------------- ----------------------------------
MARKET MARKET
PRECISION INDUSTRY* SHARE % PRECISION INDUSTRY* SHARE %
----------- ----------- ---------- ----------- ----------- ----------
Number of drilling rigs 226 644 35.1 229 644 35.6
Number of operating days (spud to release) 31,363 91,958 34.1 42,810 119,812 35.7
Wells drilled 6,315 14,920 42.3 6,907 17,359 39.8
Average days per well 5.0 6.2 6.2 6.9
Metres drilled (000's) 6,222 15,708 39.6 7,384 18,855 39.2
Average meters per day 198 171 172 157
Average meters per well 985 1,053 1,069 1,086
Rig utilization rate (%) 38.3 39.1 51.6 53.0
* Excludes non-CAODC rigs.
A conference call to review the year-end results has been scheduled for 12:00
noon MST on Thursday, February 13, 2003. The conference call dial-in number is
1-800-814-4859.
A live webcast will be accessible at www.precisiondrilling.com.
Precision Drilling Corporation is listed on the Toronto Stock Exchange under the
ticker symbol PD and on the New York Stock Exchange under the ticker symbol PDS.
FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT,
FINANCE AND CHIEF FINANCIAL OFFICER, 4200, 150 6TH AVENUE S.W., CALGARY,
ALBERTA, T2P 3Y7, TELEPHONE: (403) 716-4500, FAX: (403) 264-0251; WEBSITE:
WWW.PRECISIONDRILLING.COM.