CALGARY, Alberta, Jan. 05, 2021 (GLOBE NEWSWIRE) -- Precision Drilling Corporation (“Precision” or “the Company”) (TSX:PD; NYSE:PDS) provides a series of announcements including: 1) debt repayment update; 2) increase in long-term debt reduction target; 3) liquidity update; and 4) drilling activity update.
Debt Repayment Update
Following additional open market repurchases of its unsecured senior notes in the fourth quarter, Precision’s 2020 debt repayments totaled $170 million, exceeding the high end of its 2020 annual targeted range of $100 million to $150 million. As of December 31, 2020, the amounts outstanding under Precision’s unsecured senior notes are as follows:
- US$286 million – 7.75% senior notes due December 15, 2023
- US$263 million – 5.25% senior notes due November 15, 2024
- US$348 million – 7.125% senior notes due January 15, 2026
The Company has paid down $550 million of debt just three years into its long-term debt reduction plan, exceeding the high end of each year’s annual targeted debt reduction range. As a result of Precision’s further reduction of absolute debt levels, the Company anticipates its forward run-rate of cash interest costs from debt to be approximately $85 million.
Increase in Long-Term Debt Reduction Target
Precision has increased its long-term debt reduction target from $700 million to $800 million for the years 2018 through 2022, requiring $250 million of debt reduction over the next two years to achieve our revised target. The target increase is due to accelerated debt reduction achieved and the Company’s forward free cash flow outlook, further strengthened by its reduced fixed cost structure and lower interest expense run-rate.
Liquidity Update
Precision anticipates a reported 2020 year-end cash balance of approximately $105 million to $110 million, $30 million to $35 million higher than year-end 2019, which combined with availability under the Company’s credit facilities, provides Precision access to over $700 million in total liquidity entering 2021.
Drilling Activity Update
In the fourth quarter of 2020, Precision’s average active rig count was 26 for the U.S. plus an average of 6 rigs earning idle but contracted revenues, 28 for Canada and six internationally. As of January 5, 2021, Precision has 45 active rigs in Canada, 31 active rigs in the U.S. and six rigs active internationally. Active rig counts in Canada are expected to peak at approximately 60 in the first quarter of 2021, while U.S. activity levels are expected to continue trending upwards modestly in the quarter.
Precision’s CFO, Carey Ford stated: “Precision continues to demonstrate its ability to generate robust free cash flow and deliver on both short and long-term debt reduction targets while maintaining a strong liquidity position. The Company successfully enacted several cash preservation initiatives during 2020, including aggressive reductions in fixed costs and capital spending. In addition, we further leveraged our SAP enterprise platform to automate numerous business processes and enhance business analytics to establish a reduced fixed cost structure that is sustainable in an increasing activity environment. Precision will continue to leverage its global scale and high-quality, digitally-enabled Super Series fleet to maximize free cash flow and prioritize reducing debt levels to reach targeted leverage of below two-times net debt to Adjusted EBITDA.”