Rig automation helps Precision Drilling narrow losses
Precision Drilling Corp.’s quest to automate more of its drilling rigs with new technology helped the company reduce its losses, even as oil and gas prices continued to languish in the third quarter.
The Calgary-based driller’s new technology is in beta testing, but it rolled out new process automation controls and other emerging technologies on 20 of its rigs, which drilled 70 wells in the quarter.
Precision president and CEO Kevin Neveu said in a release the new technology is working and “the results continue to show improved efficiency, consistency and repeatability, exactly what our customers desire.”
The company’s shares jumped more than 9.7 per cent Friday, reaching $3.256 per share at close, after the company announced better-than-expected financial results.
“We believe these initiatives will further strengthen the competitive positioning of Precision’s (higher-spec rig) fleet while driving additional revenue streams from each of our technology offerings,” Neveu said of the new systems.
Precision identified automation, robotics and new technology development as one of its strategic priorities this year and is partnering with Schlumberger Ltd., Pason Systems Corp., National Oilwell Varco and software firm SAP AG to develop the processes.
Neveu said on an earnings call Friday the cost of deploying the new technology has fallen, as well as the cost to upgrade some of its rigs, and the company is slashing capital spending by $34 million, or 25 per cent, for the year.
Neveu also said he’s confident that Precision’s customers — oil and gas producing companies — will demand higher-efficiency rigs with better technology over older rigs to continue driving down costs as oil and gas prices have yet to meaningfully recover.
“It is working for them,” GMP FirstEnergy analyst Ian Gillies said of Precision’s push to focus on bigger, better drilling rigs.
He said 44 per cent of Precision’s drilling fleet is currently being utilized compared with an industry average in Canada of 33 per cent.