A weakened demand for onshore rigs has forced Precision Drilling to suspend dividend payments.
The firm today confirmed its revenue had fallen 44% to C$345million.
It made a loss of C$203milion in the fourth quarter of last year.
Precision’s shares are currently $2.73 compared to last year’s $5.73 level.
Precision’s chief executive Kevin Neveu said: “The dividend suspension, while a result of a debt covenant restriction, further strengthens the balance sheet as we continue to maneuver through uncharted waters.”
“Our decision to accelerate our transformation to a Tier 1 driller by retiring and fully writing down the value of our legacy rigs is directly tied to our long-term High Performance, High Value strategy. This transformation has been completed over a number of years, beginning in 2009 when Precision had 93 Tier 1 rigs, representing 25% of our fleet.
“After a six-year Super Series new-build program and the cumulative decommissioning of 236 legacy rigs, Precision’s fleet consists of 238 Tier 1 rigs. These Super Series rigs are configured for pad-type resource development and are designed for maximum efficiency with mechanized pipe handling, digital drilling controls and available with bi-directional pad walking systems.”
Precision currently operates 57 rigs in Canada, 32 in the US and nine internationally.
The chief executive added: “With the majority of these rigs under term contract, our margins are holding up well. However, in a market where incremental opportunities are limited, dayrates can be expected to trend lower, which we plan to partially offset by ongoing cost reduction initiatives.
“Strict capital discipline remains the core focus for our management team. Sustaining cash and reducing operating and capital costs are Precision’s top priority for the foreseeable future. Above all, our achievements in the current environment would not have been possible without the hard work and dedication of our employees in the field and office. I am proud to be a member of the Precision family and look forward to overcoming a challenging market this year.”