Precision Drilling Trust Fourth-Quarter Profit Rises

Canadian oil and natural gas driller Precision Drilling Trust (PDS Quote) on Monday said its fourth-quarter profit rose 3%, due mainly to lifted customer demand at the start of the quarter, when commodity prices were high, but warned of a weak 2009 and suspended its cash distributions indefinitely.

Quarterly earnings increased to $92.4 million Canadian dollars ($75.8 million), or 71 cents per share (58 cents per share), from CA$89.3 million, or 71 cents per share during the prior-year period.

Net earnings were reduced by income tax expense of CA$10 million ($8.2 million) in the fourth quarter of 2008 as opposed to an income tax benefit of CA$13 million in the last quarter of 2007.

Analysts predicted a profit of US 63 cents per share, on average. Analysts typically exclude one-time items.

Revenue rose 35% to CA$335 million ($274.8 million), from CA$248.7 million in the same period last year.

For the full-year 2008 the company said net earnings slid to CA$302.7 million ($248.3 million), or CA$2.39 per share ($1.96 per share), from CA$345.8 million, or CA$2.75 per share in 2007. Annual revenue rose 9% to CA$1.10 billion ($902 million).

The company said that in 2009, due to the challenging economic environment, it expects demand for its drilling services to decline in the short term, but assured investors that its term customer contracts provide solid margin support.

The company said it expects its capital spending budget to reach around CA$239 million ($196 million) for 2009. Precision also announced that it has suspended cash distributions for an indefinite period, due to its lower financial operating performance at the start of 2009. The previously announced distribution of 4 Canadian cents per unit payable on Feb. 17, 2009 to Trust and Precision Drilling Limited Partnership unit holders of record on Jan. 30, 2009 is unaffected by the suspension, the company said.

Shares of the company rose 14 cents, or 3.5%, to $4.12 in afternoon trading.