Shares of Precision Drilling (TSE:PD)(NYSE:PDS) slid after cutting its planned capital expenditures for this year amid the weak oil price environment, and announcing the sale of its U.S. coil tubing assets for a total of C$44 million.
The Calgary, Alberta-based oil and gas services provider said it has cut its 2014 capital expenditures budget to $885 million, down $23 million from its previous guidance.
It has carried forward $350 million of capital expenditures to next year's budget, which is now estimated at $493 million.
The company said its plans for 2015 include $361 million for expansion capital, as well as $112 million for sustaining and infrastructure expenditures and $20 million to upgrade existing rigs.
Its expansion capital plan includes the completion and deployment of 16 new build drilling rigs, the bulk of which will be in the U.S.
Following this, Precision said it expects to idle its rig building activity until commodity prices improve and it sees rising new build demand from customers.
The company will have a total of 238 Tier 1 drilling rigs upon delivery of all the announced new builds --- expected sometime in the middle of 2015 --- up from some 93 in 2009.
"Our Tier 1 fleet helps deliver maximum efficiency, which is desired by our customers in any commodity price environment," said chief executive officer, Kevin A. Neveu.
"While the current market is adjusting to recent rapid oil price declines, we remain intensely focused on cost management with a variable cost business model and balance sheet designed to address changing market conditions.
"We remain focused on generating strong cash flow from our existing asset base, prudently selecting the most attractive capital projects and returning value to shareholders in the form of share price appreciation and dividends," he added.
Separately, the company also announced that it has divested its U.S. coil tubing assets for a total of C$44 million in cash, with the transaction closing on November 28. It said it will focus on delivering its services through its remaining completion and production business lines in Canada and the U.S.
Precision provides customers with an extensive fleet of contract drilling rigs, directional drilling services, well service and snubbing rigs, coil tubing services, camps, rental equipment, and water treatment units.
Shares tumbled 6.6 percent in Toronto, to C$6.40 as of 10:30am ET, stretching this year's losses to over 35 percent.