CALGARY, Alberta, Sept 9 (Reuters) - Precision Drilling Trust's chief executive said on Wednesday he believes the Canadian oil and gas drilling market has bottomed, with the U.S. market not far behind, auguring a rebound for the hard-hit industry.
Units of Precision, Canada's largest driller, jumped 46 Canadian cents to C$6.68 on the Toronto Stock Exchange on volume of nearly 2 million units.
CEO Kevin Neveu told an investment conference in New York that the North American drilling business looked poised to rebound this winter and that his company was holding the line on day rates for its rigs.
This comes after the worst summer season for rig use in 15 years in Canada, as oil companies slashed drilling budgets in response to weak natural gas prices, Neveu said.
'The fact that these are the best rates (customers) expect to see -- they'd like to lock them in through the 2010 winter season because they expect there to be higher utilization next winter than there is right now, no doubt about that,' he said in webcast remarks.
'So I think we can fairly say that the Canadian market's reached a bottom.'
Precision believes the U.S. market has been in a trough since April as gas drilling dwindled, and improvement could start in the fourth quarter, Neveu said.
The comments bode well for the industry in general, although Precision units began to gain steam before the presentation, FirstEnergy Capital Corp analyst Kevin Lo said.
Shares in Precision rival Ensign Energy Services Inc also rose on Wednesday, climbing 3.3 percent to C$17.42.
'He said the market's bottomed, but it couldn't have been any worse that it was in the second quarter globally, so that's to be expected anyway,' Lo said. 'So I think just confirmation on that is probably good news.'
On rig rates, Precision aims to strike a balance between being flexible and being disciplined with its clients, so it has no plans to chop its prices to attract business, Neveu said.
'Our customers know that, our sales guys know that, but it doesn't stop them from asking and trying to beat us up like (they do) the other guys out there who will do those kinds of things. But frankly we try to be as sticky as we can around not signing on long-term at low day rates,' Neveu said.
($1=$1.08 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson) Keywords: PRECISIONDRILLING/STOCK (jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Units of Precision, Canada's largest driller, jumped 46 Canadian cents to C$6.68 on the Toronto Stock Exchange on volume of nearly 2 million units.
CEO Kevin Neveu told an investment conference in New York that the North American drilling business looked poised to rebound this winter and that his company was holding the line on day rates for its rigs.
This comes after the worst summer season for rig use in 15 years in Canada, as oil companies slashed drilling budgets in response to weak natural gas prices, Neveu said.
'The fact that these are the best rates (customers) expect to see -- they'd like to lock them in through the 2010 winter season because they expect there to be higher utilization next winter than there is right now, no doubt about that,' he said in webcast remarks.
'So I think we can fairly say that the Canadian market's reached a bottom.'
Precision believes the U.S. market has been in a trough since April as gas drilling dwindled, and improvement could start in the fourth quarter, Neveu said.
The comments bode well for the industry in general, although Precision units began to gain steam before the presentation, FirstEnergy Capital Corp analyst Kevin Lo said.
Shares in Precision rival Ensign Energy Services Inc also rose on Wednesday, climbing 3.3 percent to C$17.42.
'He said the market's bottomed, but it couldn't have been any worse that it was in the second quarter globally, so that's to be expected anyway,' Lo said. 'So I think just confirmation on that is probably good news.'
On rig rates, Precision aims to strike a balance between being flexible and being disciplined with its clients, so it has no plans to chop its prices to attract business, Neveu said.
'Our customers know that, our sales guys know that, but it doesn't stop them from asking and trying to beat us up like (they do) the other guys out there who will do those kinds of things. But frankly we try to be as sticky as we can around not signing on long-term at low day rates,' Neveu said.
($1=$1.08 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson) Keywords: PRECISIONDRILLING/STOCK (jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
