Research Analysts Issue Forecasts for Precision Drilling Corp’s Q1 2019 Earnings (PDS)

Research Analysts Issue Forecasts for Precision Drilling Corp’s Q1 2019 Earnings (PDS)

Research Analysts Issue Forecasts for Precision Drilling Corp’s Q1 2019 Earnings (PDS)

Trinidad shares rose 6 per cent, or 11 cents, to $1.95 each, reflecting the sweetened deal it had reached with Precision.

Precision, which expects to save $30 million through the deal, said the combined entity will have an enterprise value of approximately $4 billion and operate under the Precision name.

The combined company would have 398 drilling rigs if the deal closes - 170 in the US, 26 in the Middle East and 202 in Canada, although Neveu said the plan is to immediately sell 50 rigs in Canada from both fleets. But the Trinidad panned the offer, saying it was not in the "best interests" of Trinidad or its shareholders. That cash offer was for $947 million offer to purchase Trinidad Drilling Ltd. for all of the issued and outstanding common shares of Trinidad, at $1.68 per Trinidad common share.

The deal is expected to close by the end of the year. Cormark boosted their price objective on Precision Drilling from C$5.50 to C$6.00 in a research note on Friday, July 27th.

Trinidad had been shopping itself around for several months as part of its strategic review. "This failed strategic review process is a clear indication of lack of other viable alternatives for Shareholders to realize an immediate premium and liquidity", it said in its offer circular, mailed in late August. It said no suitable offers had been received. Ensign owns about 10% of Trinidad.

Finally, Cubist Systematic Strategies LLC lifted its position in Precision Drilling by 55.6% in the 1st quarter. Piper Jaffray Companies reissued a "buy" rating and set a $5.25 price objective on shares of Precision Drilling in a report on Tuesday, July 31st. "The combination provides a truly unique opportunity to combine two highly focused drilling contractors that are pursuing similar growth initiatives and competitive strategies and importantly, operating similar Tier 1 assets". "The strength in cash flow generated by this combination will ensure we meet or exceed our long-term targets while improving our financial flexibility to pursue the most attractive growth opportunities".


Equities research analysts at Jefferies Financial Group issued their Q3 2018 earnings per share (EPS) estimates for Precision Drilling in a note issued to investors on Wednesday, October 3rd.

He added: "Over the long-term, the additional scale will further strengthen Precision's operating leverage and positions the company to service our customers' continued transition to high performance drilling services with high spec AC rigs".

A combined Precision-Trinidad would have more than 200 active rigs in its North American fleet after the transaction, and 322 total rigs.

Similarly, Precision president and CEO called the deal "transformational" in a conference call Friday morning and noted the acquisition would make Precision the third largest land-based drilling company in the U.S. The company also would have an expanded platform for technology deployment and an increased inventory of "economically upgradeable rigs".

The combined company would corner ~11% of the U.S. market with 170 rigs, of which 120 are now active, Evercore ISI said in a note. It plans to leverage its increased scale and realize long-term incremental operating efficiencies through a recently upgraded information technology infrastructure and from technical support centers in Nisku, Alberta and in Houston.

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