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  Long Precision - $27.50 Target
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smr...@gmail.com  
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 More options Jul 24 2008, 12:35 pm
From: smr...@gmail.com
Date: Thu, 24 Jul 2008 09:35:23 -0700 (PDT)
Local: Thurs, Jul 24 2008 12:35 pm
Subject: Long Precision - $27.50 Target
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$27.50 Target Price based on a 7.0x EV/09E EBITDA valuation multiple ~
Currently trading below 6.0x multiple.

Seasonally Weak Results, hampered by wet weather Precision announced
Q2 2008 results that were below expectations. CFPU was reported at
$0.27, below consensus estimates of $0.30. This is well below the
$0.30 reported in Q2 2007, mostly owing to lower margins. Canadian
drilling rig utilization was 15.4% during the quarter, matching, above
14.3% recorded in Q2 2007.

Day Rates Canadian drilling day rates in the quarter were down 4%
relative to Q2 2007. Over the same period, operating costs rose 6%.
Despite this decline, management indicated rates were level
sequentially, excluding the winterization rental revenue earned in the
early part of the year.

Capital Budget Partially Delayed

PD.un announced a reduced 2008 forecasted capital budget of $290
million, down from $330 million, which was already cut from the
original $370 million budget. The reductions are expected to be spent
in 2009. Precision has contracted seven of the 19 new rigs and
interestingly four of the contracts are new rigs in Canada, where
demand is expected to improve.

Thoughts/Comments/Concerns?


 
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