CALGARY, Alberta, April 25, 2024 (GLOBE NEWSWIRE) -- This news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending, Working Capital and Total Long-term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies, see "Financial Measures and Ratios" later in this news release. Financial Highlights Revenue was $528 million compared to $559 million in the first quarter of 2023 with the decrease mainly attributable to lower U.S. activity. Adjusted EBITDA(1) was $143 million and included share-based compensation charges of $23 million as our share price increased 27% in the first quarter. By comparison, Adjusted EBITDA in the first quarter of 2023 was $203 million and included a $12 million recovery as our share price decreased 33% in the first quarter of 2023. Net earnings were $37 million or $2.53/share compared to $96 million or $7.02/share in the first quarter of 2023. Completion and Production Services revenue and Adjusted EBITDA were $87 million and $19 million, respectively, compared with $75 million and $17 million in the same quarter last year. Cash from operations was $66 million compared to $28 million in the comparative quarter. Share repurchases were $10 million compared to $5 million in the first quarter of 2023. Capital expenditures were $56 million compared to $51 million in the first quarter of 2023. Precision remains on track to reduce debt between $150 million and $200 million in 2024 and return between 25% and 35% of free cash flow to shareholders in 2024. Operational Highlights Canada averaged 73 active drilling rigs, compared to 69 for the first quarter of 2023. Canadian revenue per utilization day was $35,596 compared to $32,304 in the same period last year. U.S. averaged 38 active drilling rigs compared to 60 for the first quarter of 2023. U.S. revenue per utilization day was US$32,867 compared to US$34,963 in the same quarter last year. International averaged eight active drilling rigs, with revenue per utilization day of US$52,808 compared to US$51,753 in the first quarter of 2023. Service rig operating hours totaled 74,505, a 28% increase as compared with the same quarter last year driven by the CWC Energy Services (CWC) acquisition in late 2023. (1) See "FINANCIAL MEASURES AND RATIOS." MANAGEMENT COMMENTARY "Precision had an impressive start to 2024 and we expect to build on this momentum throughout the year. Our Canadian drilling operations, international business, and completion and production services all outperformed during the first quarter and we more than doubled our cash from operations compared to the same period last year. We continued to focus on shareholder returns and repurchased $10 million of common shares in the first quarter. We remain firmly committed to repaying debt between $150 million and $200 million in 2024 and allocating 25% to 35% of our free cash flow to share buybacks. "Our Canadian drilling business exceeded expectations in the first quarter as our Super Series rigs, AlphaTM technologies, EverGreenTM products, and dedicated crews continued to deliver High Performance, High Value services to our customers. Precision had 73 rigs active in the first quarter, representing a 6% increase over the same period last year while industry activity was 6% lower. With strong demand for our Super Series rigs and AlphaTM and EverGreenTM products that provide improved performance and efficiencies, we grew average day rates to $35,596. As the Trans Mountain pipeline expansion begins operating, followed by start-up activities of LNG Canada, we expect customer demand for our Super Series rigs to remain robust and support strong utilization well into 2025. "In the U.S., even with industry activity down nearly 20% in the first quarter compared to the same period last year, we remain focused on returns. Our day rates averaged US$32,867 and we generated daily operating margins of $11,148(2). While U.S. drilling activity continues to be influenced by weak natural gas prices and merger and acquisition activity, we believe the long-term fundamentals are positive due to growing global oil demand, decreasing inventory of drilled but uncompleted wells, and the next wave of Gulf Coast LNG facilities projected to start-up in late 2024 and 2025. "Internationally, following rig reactivations in 2023, we have eight active rigs, which generated revenue of US$38 million in the first quarter compared to US$22 million one year ago. These eight rigs are active in Kuwait and Saudi Arabia under five-year contracts, which provide stable and predictable cash flow that stretches into 2028. "With the successful acquisition of CWC in late 2023, Precision solidified its position as Canada's leading provider of high-quality and reliable well services. In the first quarter, we increased our well service hours 28% and grew Adjusted EBITDA to $19 million. The outlook for this business remains positive as the Trans Mountain pipeline expansion is expected to drive more oil service related activity, while increased regulatory spending requirements is expected to result in more abandonment work. "As shown by our first quarter results and positive outlook, we expect sustained free cash flow to be a feature of the business and will continue to assess the best route to enhance shareholder returns. We currently believe this will be a function of achieving a sustained Net Debt to Adjusted EBITDA ratio(1) of less than 1.0 times, while increasing direct capital returns to shareholders towards 50%. I would like to thank the Precision team for their hard work and dedication to our High Performance, High Value strategy and look forward to a great year ahead and generating value for our shareholders," stated Kevin Neveu, Precision's President and CEO. (1) See "FINANCIAL MEASURES AND RATIOS."  (2) Defined as Revenue per utilization day less Operating costs per utilization day. SELECT FINANCIAL AND OPERATING INFORMATION Financial Highlights   For the three months ended March 31,   (Stated in thousands of Canadian dollars, except per share amounts)   2024     2023     % Change   Revenue   527,788     558,607     (5.5 ) Adjusted EBITDA(1)   143,149     203,219     (29.6 ) Net earnings   36,516     95,830     (61.9 ) Cash provided by operations   65,543     28,356     131.1   Funds provided by operations(1)   117,765     159,653     (26.2 )                   Cash used in investing activities   75,237     78,817     (4.5 ) Capital spending by spend category(1)                 Expansion and upgrade   14,370     16,345     (12.1 ) Maintenance and infrastructure   41,157     34,450     19.5   Proceeds on sale   (5,186 )   (7,765 )   (33.2 ) Net capital spending(1)   50,341     43,030     17.0                     Net earnings per share:                 Basic   2.53     7.02     (64.0 ) Diluted   2.53     5.57     (54.6 ) Weighted average shares outstanding:                 Basic   14,407     13,648     5.6   Diluted   14,410     14,839     (2.9 ) (1) See "FINANCIAL MEASURES AND RATIOS." Operating Highlights   For the three months ended March 31,     2024     2023     % Change   Contract drilling rig fleet   214     225     (4.9 ) Drilling rig utilization days:                 U.S.   3,453     5,382     (35.8 ) Canada   6,617     6,168     7.3   International   728     433     68.1   Revenue per utilization day:                 U.S. (US$)   32,867     34,963     (6.0 ) Canada (Cdn$)   35,596     32,304     10.2   International (US$)   52,808     51,753     2.0   Operating costs per utilization day:                 U.S. (US$)   21,719     20,271     7.1   Canada (Cdn$)   19,959     18,746     6.5                     Service rig fleet   183     118     55.1   Service rig operating hours   74,505     58,341     27.7   Drilling Activity   Average for the quarter ended 2023   Average for the quarter ended 2024   Mar. 31     June 30     Sept. 30     Dec. 31     Mar. 31   Average Precision active rig count(1):                             U.S.   60     51     41     45     38   Canada   69     42     57     64     73   International   5     5     6     8     8   Total   134     98     104     117     119   (1) Average number of drilling rigs working or moving. Summary for the three months ended March 31, 2024: Revenue decreased to $528 million compared with $559 million in the first quarter of 2023 as a result of lower U.S. activity and day rates, partially offset by higher Canadian and international activity and day rates. Adjusted EBITDA was $143 million as compared with $203 million in 2023. Our lower 2024 Adjusted EBITDA was primarily the result of lower U.S. activity and day rates and increased share-based compensation charges, partially offset by increased Canadian and international activity and day rates. Share-based compensation was $23 million as compared to a recovery of $12 million in 2023. Please refer to "Other Items" later in this news release for additional information on share-based compensation. Adjusted EBITDA as a percentage of revenue was 27% as compared with 36% in 2023. U.S. revenue per utilization day was US$32,867 compared with US$34,963 in 2023. The decrease was primarily the result of lower fleet average day rates and lower turnkey revenue, offset by higher recoverable costs. We did not recognize revenue from idle but contracted rigs and turnkey projects as compared with US$1 million and US$7 million, respectively in 2023. Revenue per utilization day, excluding the impact of idle but contracted rigs and turnkey activity was US$32,867, compared to US$33,721 in 2023, a decrease of US$854 or 3%. Revenue per utilization day, excluding idle but contracted rigs, was consistent with the fourth quarter of 2023. U.S. operating costs per utilization day increased to US$21,719 compared with US$20,271 in 2023. The increase is mainly due to higher recoverable costs, fixed costs spread over lower activity and higher repairs and maintenance, partially offset by lower turnkey costs. U.S. operating costs per utilization day, excluding turnkey, was US$21,719 compared with US$19,421 in 2023. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day increased US$704. Canadian revenue per utilization day was $35,596 compared with $32,304 in 2023. The increase was a result of higher average day rates and recoverable costs. Sequentially, revenue per utilization day increased $980 due to higher recoverable costs and increased boiler revenue. Canadian operating costs per utilization day increased to $19,959, compared with $18,746 in 2023, due to higher field wages and recoverable costs. Sequentially, daily operating costs increased $769 due to higher labour related costs, including burden and larger crew formations. We realized US$38 million of international contract drilling revenue compared with US$22 million in 2023. General and administrative expenses were $45 million as compared with $16 million in 2023. The increase was primarily due to higher share-based compensation charges. Net finance charges were $18 million, a decrease of $5 million compared with 2023 and was the result of lower outstanding long-term debt. Capital expenditures were $56 million compared with $51 million in 2023. Capital spending by spend category included $14 million for expansion and upgrades and $41 million for the maintenance of existing assets, infrastructure, and intangible assets. Income tax expense for the quarter was $13 million as compared with $18 million in 2023. During the first quarter, we continued to not recognize deferred tax assets on certain international operating losses. We generated cash from operations of $66 million, repurchased $10 million of our shares, and ended the quarter with $31 million of cash and more than $600 million of available liquidity. OUTLOOK The outlook for North America energy is positive as global demand continues to rise, while geopolitical issues continue to threaten supply. In Canada, the imminent start-up of the Trans Mountain pipeline expansion, followed by LNG Canada, will provide significant tidewater access for both Canadian crude and natural gas, supporting additional Canadian drilling activity. In the U.S., the next wave of LNG projects is expected to add approximately 12 bcf/d of export capacity over the next three years, supporting additional U.S. natural gas drilling activity. In Canada, we currently have 48 rigs operating, ten more rigs than a year ago, and expect this trend to continue throughout spring break-up due to increasing year-round pad drilling in the Montney and heavy oil programs. Our Canadian fleet is in high demand and we expect customer demand for our Super Triple and Super Single pad capable fleets to exceed supply into 2025 with increased take away capacity. In the U.S., we currently have 39 rigs operating as drilling activity continues to be influenced by weak natural gas prices and pending merger and acquisition transactions. We view these headwinds as short-term in nature and believe rig count could improve in the later part of 2024 with continued strong oil prices. Internationally, we expect to have eight rigs running throughout all of 2024. This represents a 40% increase in activity compared to 2023, which should drive a 50% increase in our international earnings. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure additional rig activations. As the premier well service provider in Canada, with size and scale, the outlook for this business is positive. We expect customer demand to increase with the start-up of the Trans Mountain pipeline expansion and increased regulatory spending requirements for well abandonments, supporting healthy activity and strong pricing into the foreseeable future. We believe cost inflation is largely behind us and will continue to look for opportunities to lower costs. Contracts The following chart outlines the average number of drilling rigs under term contract by quarter as at April 24, 2024. For those quarters ending after March 31, 2024, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts. As at April 24, 2024   Average for the quarter ended 2023     Average     Average for the quarter ended 2024     Average       Mar. 31     June 30     Sept. 30     Dec. 31     2023     Mar. 31     June 30     Sept. 30     Dec. 31     2024   Average rigs under term contract:                                                             U.S.   40     37     32     28     34     20     17     13     8     15   Canada   19     23     23     23     22     24     21     20     20     21   International   4     5     7     7     6     8     8     7     7     8   Total   63     65     62     58     62     52     46     40     35     44   SEGMENTED FINANCIAL RESULTS Precision's operations are reported in two segments: Contract Drilling Services, which includes our drilling rig, oilfield supply and manufacturing divisions; and Completion and Production Services, which includes our service rig, rental and camp and catering divisions. SEGMENT REVIEW OF CONTRACT DRILLING SERVICES   For the three months ended March 31,   (Stated in thousands of Canadian dollars, except where noted)   2024     2023     % Change   Revenue   443,367     486,076     (8.8 ) Expenses: