More pain in the oil patch CanElson Drilling halves dividend cuts capital

CALGARY — CanElson Drilling Inc. said Monday it will reduce its quarterly dividend by 50%, defer the completion of three new drilling rigs, and reduce its capital budget by 80% as a result of low crude oil and natural gas prices.The Calgary-based company says activity remains relatively strong its expects both activity and pricing levels to decline in 2015 in response to what appears to be a prolonged decline in global oil prices.CanElson said it expects to reduce the active rig count — with the biggest reductions in Saskatchewan and North Dakota.Our continued financial discipline will allow CanElson to weather the impact of sustained low commodity pricesIts capital program will fall to $12.9 million from $63.9 million and its quarterly dividend fall to three cents from six cents per share but the company says CanElson has well-positioned itself to withstand price cycles.“Our modern fleet of drilling rigs and our continued financial discipline will allow CanElson to weather the impact of sustained low commodity prices,” said Randy Hawkings, CanElson’s president and chief executive.Is this the end of the oil market as we know it?Oil storage piles up in Hardisty, but price gap leaves traders at disadvantageThe company says 36 drilling rigs, representing 72% of its fleet, are currently active but the number is expected to fall.It also says construction of three rigs — which were to contracted to a customer — has been delayed indefinitely and negotiations with the customer are ongoing. The company had spent $13.6 million on components for the rigs as of Dec. 31.The company’s next financial report is scheduled for March 2, when 2014 12-month and fourth-quarter results are issued.

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