Precision Drilling slashes spending by 44%

Precision Drilling slashes spending by 44%

ROGER JORDAN, Associate Editor

CALGARY, Alberta – Precision Drilling Corp., Canada's largest oilfield services company, is to slash its capital spending by more than 40% next year, the company said.

The news comes as oil falls to a five-year low in response to an oversupplied market, and operators announce plans to cut their spending.

Calgary-based Precision is set to spend about C$885 million ($771 million) this year, the company said in a statement on Dec. 8. But in 2015, the company is planning capital expenditures totaling C$493 million, a 44% reduction.

C$361 million of next year’s budget will be directed towards expansion, which includes the completion and deployment of 16 previously announced newbuild rigs.

These include fifteen Super Triple rigs for deployment in the U.S. in the first half of 2015, and one Super Triple rig which is expected to be deployed in Kuwait late in the second quarter.

Following these deliveries, the company will idle its rig building activities until it sees “an improved commodity price environment and rising customer newbuild demand,” Kevin Neveu, Precision’s CEO, said.

Precision has also divested its U.S. coiled tubing assets, in a transaction which closed on Nov. 28, for C$44 million, the company added.

The company currently has 217 Tier 1 drilling rigs and will have 238 Tier 1 drilling rigs upon delivery of all announced newbuilds, up from 93 Tier 1 rigs in 2009. To date in 2014, the company has completed and delivered 13 newbuild rigs of the 18 planned deliveries for 2014.