Precision sees room for rig rebound as producers weather slump

Precision sees room for rig rebound as producers weather slump: "Even with the oil market in a funk again, producers are adjusting and Precision Drilling Corp. sees the potential for more spending by customers in the second half. Canada’s largest drilling services company sees some room for the North American rig count to rebound as customers restart wells and upgrade equipment after cutting costs, CEO Kevin Neveu said in an interview. The current price slump poses no threat to Precision’s dividend, he said. “I think the rig count actually might have dropped a little lower than necessary,” Neveu said by phone from Calgary. “I think our customers have saved more money than they intended to save.” The oil and gas industry has cut spending by tens of billions of dollars and eliminated more than 100,000 jobs to weather the crude slump. Prices that had rebounded somewhat recently have tumbled 12% this month on concern the Greek crisis will hurt the global economy, while an end to Iran sanctions could boost supplies. Still, the number of active oil rigs in the U.S. increased to 640 in the week ended July 3 from 628 in late June, paring a 60% decline from October levels, according to Baker Hughes Inc., the Houston-based oil-services company that has kept rig counts since 1944. A strong rig-count recovery, though, would require U.S. oil prices at $60/bbl to $70/bbl, Neveu said. The West Texas Intermediate benchmark fell 0.4% to $52.33/bbl at the close in New York on Tuesday, after slumping 7.7% on Monday. Precision Drilling is the ninth-best performer on the Standard & Poor’s/TSX Energy Index this year, up 6.9%, compared with a 7.8% decline in the 63-member indicator. It has a market value of C$2.2 billion ($1.7 billion)."

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