Canadian Manufacturing

Precision Drilling CEO blasts governments for weak energy investment climate

Ottawa's recent passage of Bill C-69 to revamp the way projects are approved and C-48 to ban oil tanker traffic on B.C.'s North Coast has ruffled feathers

July 26, 2019  The Canadian Press

CALGARY—The CEO of Precision Drilling Corp. lashed out at political leaders in Ottawa, B.C. and Quebec on Thursday during a conference call to discuss his company’s second-quarter financial results.

A “zero” level of investment interest from capital markets in the Canadian energy sector is clearly linked to government policies, Kevin Neveu charged, before calling on candidates in the fall federal election to voice their support for the industry.

“I’m very disappointed with the weak energy investment environment in Canada. I believe this is a direct result of the lack of federal government leadership and unco-operative political self-interest evident in British Columbia and Quebec,” he said on the call with financial analysts.

“Like most energy firms operating in the Canadian region, we are deeply frustrated by the Canadian federal government’s failure to support the Canadian oil and gas industry’s globally recognized leadership for social, environmentally responsible energy development.”

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Ottawa’s recent passage of Bill C-69 to revamp the way projects are approved and C-48 to ban oil tanker traffic on B.C.’s North Coast are “clearly intended to undermine the domestic energy industry,” Neveu said.

The premiers of B.C. and Quebec, meanwhile, have opposed pipeline projects industry leaders say are needed to get barrels of oil to market.

Precision reported that operating days for its U.S. fleet grew by 6.2% and revenue per day by 7.5% in the three months ended June 30 compared to the year-earlier period.

In contrast, operating days in Canada fell by 14.9% and revenue per day was down 2.1%.

Precision, which has moved two of its high-specification rigs from Canada to the U.S. in the past year, is prepared to relocate more rigs if the situation continues, Neveu said.

The Calgary-based company raised its debt-reduction target for 2019 to $200 million from previous guidance of between $100 million and $150 million as a result of unexpectedly strong cash flow in the second quarter.

In a research report, Tudor Pickering Holt & Co. praised Precision’s debt reduction and said it is navigating a recent slowdown in the North American oilfield services market as well as can be expected.

The driller recorded a net loss of $13.8 million in the quarter, down from a loss of $47.2 million in the same period last year, while revenue increased by 9% to $359 million from $331 million.

The company’s stock, which touched at least a 10-year low of $2.12 last week, closed down nine cents or four per cent at $2.18 on Thursday.