PDS (PD.TO) - Precision Drilling

[roundball100]

There was previously a thread discussing PDS / PD.TO (perhaps over a year ago), but I don't seem to find it in the investment-ideas category.  Along with the overall pessimism in the O&G sector, PDS seems to be experiencing a severe beating-up.  Will there be reinvestment in drilling ahead of economic turn-around? 

[zippy1]

Is this the one that you  are looking for?

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/precision-drilling-1341/msg10678/#msg10678

[roundball100]

I do recall SharperD being one that contributed significant information to the thread, but it was later than 2009 (and also a longer thread).  Vague memory says it covered a period when the price ranged from $6 to $12 or so.  I was wondering if there was a current thread on it or perhaps the board has gone silent on that one.

[Uccmal]

Sharper Dingaan is the real expert on PD.  I held it For about two years up until sometime last fall.

 

I got tired of management.  Everytime they get a bit of cash, they blow it on new rigs.  They need to be paying a dividend consistently to keep them disciplined. 

 

At this price it should be safe money.  Management is so terrible that a takeover is a real option, IMO.

[Uccmal]

Over the years present management has botched up acquisitions (grey wolf), over built rigs, become an income truat, converted back to a company, paid a dividend, cancelled the dividend.

 

Have a good look at the cap ex, and determine if they ever make their money out of it or are just stationary.  Also, have a look at the debt load.  If/when interest rates rise this company will get destroyed.  Definitely dont like managment. 

[roundball100]

Thanks Al (insightful). BTW, is there anything that you don't like about them?

[VAL9000]

I do recall SharperD being one that contributed significant information to the thread, but it was later than 2009 (and also a longer thread).  Vague memory says it covered a period when the price ranged from $6 to $12 or so.  I was wondering if there was a current thread on it or perhaps the board has gone silent on that one.

 

I think it was this thread on natural gas:

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/a-natural-gas-disconnect/

 

 

[gaf63]

I have been in and out of PDS since 09, sold out when it ran up to 17.  Am now back in. 

As I read it , their debt is fixed at about 6.65% and first tranch due in 2019.

I think that rising rates would affect them if they have to use their credit line.  This use could come about if their op. cash flow declines and they cant fund their new build rigs from this cash flow. 

They have about 15-20 rigs left to build for this yr.  All are contracted to long term contracts, 3 yr. in US, 4 yr. in Canada.

The Grey Wolf acquisition happened at end of 08, terrible timing.  During 09,10 they paid down their debt to ~24% of equity.  The debt is now back up to 57% of equity from funding the new builds which is at a high end for them,

PDS could languish at this level for a while with oil prices at this level or lower.  As Uccmal mentioned , the cap ex is high and if slowed down would allow them to use cash flow to pay down their debt, and return something to shareholders.  Think that the price wont move back to the highs until they do.  Gaf