Precision Drilling Seals Deal for 8 Additional Newbuilds
Precision Drilling announced the signing of eight new build drilling rig contracts. With this announcement, Precision has increased its 2011 newbuild rig program to 38 rigs. These eight rigs are expected to consist of four Super Single rigs for the Canadian market and four Super Triple 1200 rigs for the U.S. market.
Of the total 38 rigs in the 2011 program, Precision expects to deliver 18 in 2011 and the remaining 20 in 2012. Precision has committed to 47 newbuild rigs since the beginning of 2010 and has signed long-term contracts for all of the rigs.
Precision now estimates that capital expenditures for 2011 will total $880 million. To complete the 2011 newbuild rig program and rig upgrades, Precision expects there will also be an additional $303 million of carry forward capital expenditures in 2012. The total 2011 capital expenditure plan includes $144 million for sustaining and infrastructure expenditures and is based upon currently anticipated activity levels for the year. Additionally, $508 million is slated for expansion capital for the 2010 and 2011 newbuild rig programs. The total capital expenditures also include the cost to upgrade approximately 20 rigs and to purchase long lead time items for future newbuild rigs or upgrades at an anticipated cost of $228 million. Precision expects the 2011 capital expenditures of $880 million will be split $790 million for the Contract Drilling segment and $90 million for the Completion and Production Services segment.
Kevin Neveu, President and Chief Executive Officer stated, "Precision's Super Series rigs continue to generate a high level of customer interest despite the persistent global economic concerns. I am particularly pleased by the rapid market acceptance of our new Super Triple ST-1200 rig which is already proving more successful than we expected. Currently Precision has newbuild contracts for seven additional ST-1200 rigs following our first deployment in July of this year. The mobility and operating efficiency demonstrated by our Super Series rigs address the key challenges our customers face developing unconventional oil and gas reserves."
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