- Precision Drilling (TSX:PD) has posted a disappointing quarter as COVID-19 and bottomed-out commodity prices continue to affect the oil industry
- Total revenue for the quarter ending March 31 was down 12.6 per cent to C$379 million
- Most significantly, the company reported a net loss of $5 million, compared to a net profit of $25 million last year
- As market volatility continues, the company is bracing for a sustained reduction in demand for oil and gas services well into next year
- Precision Drilling (PD) is currently up 7.58 per cent to $0.71 per share, with a market cap of $194.7 million
Precision Drilling (TSX:PD) has posted a disappointing quarter as COVID-19 and bottomed-out commodity prices continue to affect the global oil industry.
Total revenue for the quarter ending March 31 was down 12.6 per cent to C$379 million, compared to $434 million in the same period last year. Operating earnings also dropped by 63.6 per cent from $62 million to $22.5 million.
Perhaps most significantly, however, was the impact on the company’s net earnings. In the first quarter of 2019, Precision reported a net profit of $25 million, but this year that dropped by more than 121 per cent to a net loss of $5.28 million.
As has been widely reported, the devastating combination of COVID-19 and the OPEC oil price war has resulted in a substantial over-supply in resources, far exceeding that of demand.
This has culminated in, as Precision puts it, “the deepest downturn the oil and gas services industry has ever experienced.”
While governments of oil-producing nations have worked hard to limit oil supply and reinstate a balanced market, the situation remains dynamic and the overall duration and magnitude of the impact is still unknown.
Kevin Neveu, President and CEO of Precision Drilling, said that while the company’s first quarter results were only nominally impacted, it is bracing for a sustained reduction in demand for oil and gas services well into next year.
“As a result of acting quickly and aggressively, Precision has not suffered a shut down, interruption in services, or any capability reduction due to the pandemic.
“We will continue to prioritize Precision’s cash liquidity during this downturn and will actively pursue any additional cash generating opportunities within the organization,” he added.
Precision Drilling (PD) is currently up 7.58 per cent to $0.71 per share at 1:45pm EDT.