CALGARY - Precision Drilling Corp. (TSX:PD) plans to cut capital spending to $485 million in 2013 while also instituting a quarterly dividend of five cents per share.

Based on the company's closing price of $7.29 on Friday, the dividend would produce an annual yield of 2.7 per cent for holders of stock in the Calgary-based provider of contract drilling and other services to the oil patch.

The dividend will be payable Dec. 28 to shareholders of record Dec. 20.

"We are pleased to return value directly to our investors through the implementation of a dividend," president and CEO Kevin Neveu said in making the announcement Monday.

Precision Drilling said its 2013 capital expenditure plan includes $164 million for expansion capital, $194 million for sustaining and infrastructure expenditures and $127 million to upgrade existing rigs.

About $417 million will be directed to the contract drilling segment and $68 million to the completion and production services segment.

Precision said it anticipates its 2012 capital expenditures to be approximately $920 million, consistent with previous guidance.

"Over the past five years Precision has transformed from its legacy fleet, operating only in Canada, to a pre-eminent North American service provider with 300 high performance rigs," Neveu said.

He said he was "particularly proud" that Precision's super series rigs are in virtually every unconventional oil and gas play in Canada and the United States.

"Since 2007 this transformation has included over 110 new build rigs and over 40 rigs upgraded, with all of these investments supported by long-term customer contracts delivering excellent financial returns to Precision,' Neveu said.

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