Precision Drilling bringing back 1,000 workers as activity doubles

Recent reactivation of 53 rigs signals improvement in oil sector

Precision Drilling Corp., CALGARY one of Canada’s largest drilling companies, has brought back 1,000 employees and begun increasing the price it charges customers for its specialized rigs in a sign that oilfield activity levels are beginning to recover after a prolonged downturn.

President and CEO Kevin Neveu said Friday the company was in “the early stages of this rebound” and had reactivated 53 rigs in North America and re-hired 1,000 employees. He said the majority of those oilfield workers had previously been employed by Precision.

“We’re encouraged by the significant improvement in sentiment of our customers and the resulting increase in activity and market share that we’ve achieved,” Neveu said.

Calgary-based Precision said it would hike prices for its larger, deeper-reaching rigs — called “super triples” — as demand is increasing.

Oilfield activity has slowed dramatically and tens of thousands of people have lost their jobs in Alberta since crude prices began their dramatic fall more than two years ago, with very few signs of a rebound. But Neveu said Precision had now more than doubled its activity levels since the trough, which he defined as the second quarter of this year.

“With 37 rigs operating in the U.S. today, our activity is up 70 per cent from second quarter lows, while the industry increase is approximately 35 per cent,” the company said. “We believe our market share increase and contract additions reflect both the desirability of Precision’s high performance Super Triple rigs and our customers’ improving outlook.”

AltaCorp Capital analyst Aaron MacNeil said the Canadian drilling industry is bifurcated between large and small rigs. He added that Precision is well-positioned in the market for the larger, more automated rigs and has been able to book new contracts and better prices for those rigs next year.

“Those are starting to see pricing traction now, which means that they’re starting to come up against the available supply. Even though they’re maintaining their market share, they should relatively outperform in Canada,” MacNeil said.

Neveu cautioned that while oilfield activity levels have improved and were approaching 2015 levels, “our third quarter results demonstrate how very tough — how brutal and unforgiving — this business can be.”

Precision posted a $47-million net loss in the third quarter, less than the $86.7-million net loss it posted in the same period a year ago. The loss amounted to 16 cents per share, compared with 30 cents a year ago.

The company’s revenues also declined 44 per cent to $201.8 million in the third quarter, compared with $364 million in the same period in 2015.

MacNeil said he expects oilfield activity levels to recover slightly this winter drilling season, with more rigs working this year than last year. He said he believes the second quarter of 2016 should mark the cyclic low point of the current downturn in the oilfield.

With 37 rigs operating in the U.S. today, our activity is up 70 per cent from second quarter lows …