Precision Drilling Says Exceeded 2022 Debt Repayment Guidance; Provides Capital Allocation and Operational Updates
06:36 AM EST, 01/05/2023 (MT Newswires) -- Precision Drilling (NYSE: PDS, TSX: PD) on Thursday said it lowered its total debt by C$106 million in 2022, exceeding its C$75 million goal, and will look to exceed its long-term debt reduction targets.
The drilling services provider said its outstanding debt obligations as of Dec. 31, 2022 included a senior credit facility of US$44 million due June 18, 2025; 7.125% senior notes of US$348 million due Jan. 15, 2026; and 6.875% senior notes of US$400 million due June 15, 2029. In addition, Precision had about US$22 million of real estate credit facilities and ended 2022 with a cash balance of C$22 million and total liquidity of almost C$600 million, the company said.
Precision said it is "well on track" to achieve its long-term goal of repaying over C$400 million in debt and reaching a sustained net debt to adjusted EBITDA leverage ratio of below 1.5 times by the end of 2025. Given its "strong" free cash flow outlook, the company now expects leverage between 1.25 and 1.75 times by the end of 2023 and intends to exceed its long-term debt reduction targets on both an absolute level and as a multiple of adjusted EBITDA.
The company said it will continue to allocate 10% to 20% of free cash flow before debt principal repayments toward the return of capital to shareholders. During 2022, Precision repurchased and cancelled 130,395 common shares under its normal course issuer bid.
Precision also said it continues to experience "strong" customer demand for drilling services, its Alpha technologies and EverGreen environmental solutions, and expects its Canadian and U.S. fourth quarter field margins to exceed its previous guidance and continue trending upward in 2023.