Calgary — The Canadian Press Published on Friday, Feb. 12, 2010 8:07AM EST
Precision Drilling PD.UN-T intends to convert into a growth-oriented corporation by the end of May, the income trust announced Friday along with financial results showing a $24.9-million loss in the fourth quarter.
The Calgary-based trust, one of North American energy sector's biggest contract drillers, said the switch to a corporate structure will be more attractive to investors given changes to federal law announced in October 2006.
Precision's announcement comes as various income trusts adapt to the change in federal income tax law, which comes into final effect next January.
A corporate structure will remove certain limits on non-resident ownership and Precision's ability to make acquisitions, the trust said. However, it provided few details in its early-morning announcement.
Some income trusts – which are usually set up to make monthly cash distributions to unitholders – have announced they will continue to make regular payouts but in the form of dividends.
However, Precision Drilling suspended distributions to unitholders a year ago as a result of weakened activity in the oil and gas sector and didn't specify in its announcement whether it intends to pay dividends to shareholders.
The trust also announced that revenue in its fourth quarter fell 14.6 per cent, to $286-million from $335-million a year earlier.
Precision had net loss of $24.9-million in the three months ended Dec. 31, compared with a profit of $92.4-million in the fourth quarter of 2008.
The trust made no distributions in the fourth quarter, compared with $53.5-million in cash and $24-million in kind for the comparable period of 2008.
On a per-unit basis, Precision had a net loss of 9 cents in the fourth quarter of 2009, compared with net income of 66 cents per diluted unit a year before.
Precision drilling units closed Thursday at $8.81 on the Toronto Stock Exchange.
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