UPDATE 1-Precision Drilling raises capex budget as demand stays strong

Mon Apr 28, 2014 7:29am EDT

* Revenue jumps 13 pct, profit rises 9 pct

* Raises full-year capex plan for second time (Adds details, background, estimate, shares)

April 28 (Reuters) - Precision Drilling Corp , Canada's largest oil and gas drilling contractor, raised its full-year capital spending plan for the second time in over a month, citing strong demand for its new rigs.

The company raised its capital budget by nearly a third to C$833 million ($755 million) after reporting better-than-expected revenue on higher pricing and drilling activity in North America and internationally.

Precision Drilling said it would spend the additional capital on nine new rigs, expected to be delivered in the second half of 2014 and early 2015. The company said it had contracts for eight of the nine rigs.

Precision Drilling, which also operates in Asia, Latin America and North Africa, said last month that it had secured contract renewals and new contracts in Mexico and the Middle East. The company then raised its capital budget by C$119 million.

The company said on Monday that it would look at getting two new rigs delivered per month starting 2015, if customer demand continued at "the current pace".

Precision Drilling, which competes with Ensign Energy Services Inc, Trinidad Drilling Ltd and Savanna Energy Services Corp, also provides well completion and production services.

Precision Drilling on Monday warned that the well servicing and production business remained challenging as customers spent less.

Lower margins at the business resulted in a slightly lower-than-expected profit in the first quarter ended March 31.

Net profit rose 9 percent to C$101.6 million, or 35 Canadian cents per share, but missed the average analyst expectation of 36 Canadian cents per share, according to Thomson Reuters I/B/E/S.

The Calgary, Alberta-based company's revenue rose 13 percent to C$672.2 million, above the average analyst estimate of C$661.6 million.

Precision Drilling's New York-listed stock closed at $12.56 on Friday, while it closed at C$13.84 on the Toronto Stock Exchange. ($1 = 1.1030 Canadian Dollars) (Reporting By Shubhankar Chakravorty in Bangalore; Editing by Joyjeet Das and Sriraj Kalluvila)

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