CALGARY, Alberta (Reuters) - Canada’s largest oil rig contractor, Precision Drilling Corp (PD.TO)(PDS.N), reported a smaller-than-expected quarterly loss on Friday as North American drilling activity picked up on higher crude prices.
The company said it had 61 rigs operating in the United States in the third quarter, more than double the total a year earlier. Precision currently has 49 active rigs in Canada, up from 31 in the same period of 2016.
Brent crude LCOc1 prices have strengthened since the summer and are hovering near $60, benefiting from OPEC-led output cuts and a fall in U.S. inventories while U.S. light crude oil CLc1 prices have climbed above $53 a barrel. [O/R]
Precision’s chief executive, Kevin Neveu, said customers had learned to operate in a “lower for longer” oil price environment and commodity fundamentals showed the global oil supply glut was easing.
“We believe these fundamentals form a constructive environment as our customers finalize 2018 drilling budgets, with customer bookings for additional rig deployments in late Q4 and Q1 2018 supporting this view,” Neveu said in a statement.
In Canada, third quarter activity was lower than expected because of weather delays and weak Alberta natural gas prices that deterred some customers from drilling.
The company cut its 2017 budget by 25 percent to C$104 million due to lower upgrade and maintenance expenditure and said spending was expected to remain around that level in 2018.
Precision’s net loss narrowed to C$26.3 million ($20.4 million), or 9 Canadian cents per share, in the third quarter ended Sept. 30, from C$47.4 million, or 16 Canadian cents per share
Excluding items, the company reported a loss of 9 Canadian cents per share, less than the estimate of 12 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Precision shares were up 8.2 percent on the Toronto Stock Exchange at $3.22.
Additional reporting by Akshara P in Bengaluru; Editing by Frances Kerry and Phil Berlowitz