Precision Drilling (PDS) Exits Mexico With The Sale Of Rigs
Zacks Investment Research | Mar 18, 2019 11:18PM ET
Precision Drilling Corporation (NYSE:PDS) has announced the sale of five drilling rigs and ancillary equipment based in Mexico.
The cumulative value of these transactions is $48 million. Till date, the company has received $30 million from the sale of three rigs. It will receive $10 million and $8 million from due delivery of the fourth and the fifth rig in March and April 2019, respectively. On completion of the transaction, Precision Drilling will have no assets in Mexico.
Also, the company inked a deal to divest the water treatment business, Terra Water Systems. The price of the sale has not been disclosed. The company is considering sales of other non-core assets and businesses to focus on land drilling business as well as efficiency driven technology initiatives.
Moreover, the company has inked three-year contract renewals for two rigs in Saudi Arabia. The transaction is effective on Mar 1, 2019. The original contracts for these rigs expired in August 2018. Since then, the rigs have been working on shorter-term extensions. Currently, Precision Drilling’s third rig is operating in Saudi Arabia and is contracted through 2022.
Precision Drilling was awarded one-year extensions on two rigs in Kuwait. The contracts for these rigs were set to expire in the middle of this year. The delivery of the company’s sixth new build rig is due on July, 2019. On delivery, the company will have nine rigs functioning in the Middle East on long-term contracts. These awards provide the company with steady stream of cashflows and cushion amid macro volatilities.
Separately, Precision Drilling commenced the redemption of $30 million of its 6.50% senior notes due 2021 on a pro-rata basis. The available cash in hand will be used for this purpose. The redemption payment will be made on April 16, 2019. This reiterates the company’s commitment toward debt reduction and enhances shareholders’ value.
Zacks Rank & Key Picks
Currently, Precision Drilling carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy space are Antero Resources Corporation (NYSE:AR) , CrossAmerica Partners L.P. (NYSE:CAPL) and Lonestar Resources US Inc (NASDAQ:LONE) . While Antero Resources and CrossAmerica Partners sport a Zacks Rank #1 (Strong Buy), Lonestar Resources carries a Zacks Rank #2 (Buy). You can see Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.