PRECISION DRILLING Corp — Interim / Quarterly Report 2003

Jul 31, 2003

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO SECTION 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For July 31, 2003 Commission File Number: 001-14534 PRECISION DRILLING CORPORATION (Exact name of registrant as specified in its charter) 4200, 150 - 6TH AVENUE S.W. CALGARY, ALBERTA CANADA T2P 3Y7 (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F [] Form 40-F [X] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)._______ Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_______ Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [] No [X] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A ------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PRECISION DRILLING CORPORATION Per: /s/ Dale E. Tremblay --------------------------------------- Dale E. Tremblay Senior Vice President Finance & Chief Financial Officer Date: July 31, 2003 Calgary, Alberta, Canada - July 31, 2003 PRECISION DRILLING CORPORATION ANNOUNCES IMPROVED SECOND QUARTER RESULTS Precision Drilling Corporation ("Precision" or the "Corporation") today reports earnings per share from continuing operations for the three months ended June 30, 2003 of $0.12 compared to $0.03 in the same quarter of 2002. Included in earnings from continuing operations is a $1.2 million ($0.02 per share) gain on disposal of equity investments and a $4.3 million ($0.05 per share) write down of operating assets in the Technology Services segment. Also during the quarter the Corporation sold its interest in an Argentinean drilling rig joint venture realizing a gain on disposal of discontinued operations of $4.4 million or $0.08 per share, bringing total earnings per share to $0.20. For the six month period ended June 30, 2003, earnings per share from continuing operations was $1.42 compared to $1.22 for the same period in 2002. Revenue of $356.6 million for the quarter increased by $32.2 million or 10% over the prior year. The majority of this increase came from the Corporation's Canadian operations. Uncertainty as to the timing and duration of spring breakup always presents challenges in predicting second quarter operating results and this year was no exception. Strong first quarter demand for services continued into the second quarter; however activity levels were curtailed by heavy snowfalls late in the season and extended periods of rain throughout most of the Western Canadian Sedimentary Basin limiting access to drilling sites. During the quarter Precision had as many as 80 drilling rigs waiting on weather conditions to allow them to go to work. The Corporation's Canadian operations should continue to be the driver for improved earnings in 2003. Customer requests for services indicate that the activity shortfall experienced in the second quarter should be made up in the second half of the year. The Contract Drilling segment's revenue increased by 14% to $139.1 million in the second quarter compared to $122.1 million in the same quarter last year. For the six-months ended June 30, revenue increased 11% from 2002. In Canada, the rig fleet achieved 5,605 operating days for a utilization rate of 27% in the quarter compared to 4,146 operating days in the same quarter last year with a 20% utilization rate. The increase in rig operating days of 35% for the quarter and 23% for the six-month period follows the overall industry activity. Average day rates were down year over year. Soft demand for rigs resulted in reduced rates in the latter half of 2002. These lower rates carried through to 2003. Pricing in Canada is expected to improve in 2003 as anticipated activity reaches record levels. During the second quarter the Corporation experienced an increase in international drilling activity as the number of days increased over the same quarter in 2002 by 27% to 895 days. The increase in days is the result of increased activity in Mexico and a one rig project in India. The Corporation has entered into a second rig contract in India, is mobilizing another rig to the Middle East and is adding three rigs to its fleet in Mexico. The service rig fleet generated 77,018 operating hours in the second quarter, up 3% from the same quarter last year. Average hourly rates have remained consistent with the second quarter of 2002. In the second quarter, revenue for the Technology Services segment was 5% higher than the comparable quarter of 2002. Increases were experienced in all geographical locations except Europe/Africa and the Mexico integrated services project. The most significant increase was realized in the Middle East division where revenue increased $6.7 million, or 113%, due to a wireline contract in Yemen and additional Controlled Pressure Drilling contracts. The US region has experienced month over month growth in line with the increased rig count. Revenue for the quarter was contributed from Canada at 31% (2002 - 32%), US 26% (2002- 24%) and International 43% (2002 - 44%). Operating earnings as a percentage of revenue improved moderately from a loss of 11% in the second quarter of 2002 to a loss of 10% this year. Excluding the $4.3 million writedown of operating assets, operating earnings as a percentage of revenue would have been a loss of 7%. Depreciation expense increased as a result of asset writedowns, increased capital assets and a gain on disposal of capital assets in 2002 of $2.7 million compared to a loss on disposal in 2003 of $0.4 million. Total capital expenditures in the Technology Services segment in the last twelve months have been $233.3 million. The steps initiated in the first quarter to reduce costs and improve profitability are continuing. In certain international locations these steps have proven to be a significant challenge and will require more time and attention to achieve desired results. The Technology Services segment continues with its new tool build program. Management continues to focus on prioritizing the deployment of these new tools and improving the efficiency of operations in the Technology Services segment. The Rental and Production segment experienced an increase in revenue of 16% over the prior year to $63.8 million. The segment's rental division realized higher revenues due to increased rental days and a modest increase in revenue per rental day driven by the activity levels in Canada. Industrial plant maintenance revenue was up on the prior year by 11% due to an increase in activity in Canada. Due to the seasonality of the business, the second quarter of a year is typically the busiest quarter for industrial plant maintenance. Certain statements contained in this press release, including statements which are related to drivers for improved earnings, customer requests for services and drilling activity and which may contain words such as "anticipate", "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Precision to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market for oil and gas and related products and services; competition; political and economic conditions in countries in which Precision does business; the demand for services provided by Precision; changes in laws and regulations, including environmental, to which Precision is subject and other factors, which are described in further detail in Precision's filings with the Securities and Exchange Commission.

• EXCLUDES BUSINESS ACQUISITIONS (1) CERTAIN EXPENSES HAVE BEEN RECLASSIFIED BETWEEN SEGMENTS TO MORE APPROPRIATELY REFLECT OPERATING EARNINGS. CANADIAN DRILLING OPERATING STATISTICS

• Excludes non-CAODC rigs. A conference call to review the second quarter 2003 results has been scheduled for 12:00 noon MST on Thursday, July 31, 2003. The conference call dial-in number is 1-800-814-4853. A live webcast will be accessible at WWW.PRECISIONDRILLING.COM by selecting Investor Relations. Precision, headquartered in Calgary, Alberta, Canada, is the largest Canadian integrated oilfield and industrial services contractor. Precision Drilling Corporation is listed on The Toronto Stock Exchange under the trading symbol "PD" and on the New York Stock Exchange under the trading symbol "PDS". FOR FURTHER INFORMATION, PLEASE CONTACT DALE E. TREMBLAY, SENIOR VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER, TELEPHONE: (403) 716-4500, FAX: (403) 264-0251; WEBSITE: WWW.PRECISIONDRILLING.COM.