Precision’s hidden asset: High-quality rigs

Article Excerpt

PRECISION DRILLING CORP. $5.43 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.9 million; Market cap: $1.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 5.2%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract drilling services to land-based oil and gas producers, mainly in North America, through 329 rigs. Even though low oil and gas prices have slowed drilling activity, demand for Precision’s Super Series rigs remains strong. That’s because these rigs can reach deeper pockets of oil than regular rigs. The company recently received a order for a new Super Series rig. As a result, it now plans to spend $546 million on new rigs and other upgrades in 2015, up 7.9% from its previous estimate of $506 million. Including this order, the company expects to deliver 18 rigs in 2015 (13 for the U.S., four for Canada and one for Kuwait), up from 15 in 2014. Drillers have already signed contracts for the new rigs, which cuts the risk…

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