"In Canada the first quarter is typically the busiest quarter for the drilling industry, but this year the usual ramp-up activity in the new year didn't happen," Lyle Whitmarsh, the CEO of Trinidad Drilling, told analysts during a conference call on Thursday.
"And activity started to drop off much earlier than we would normally expect."
For the first quarter, Trinidad saw a 53 per cent drop in earnings to $12.1 million or nine cents a share, compared with $25.8 million, or 19 cents a share, for the same period last year.
It's a plight familiar to several other energy services companies that have reported earnings in recent days.
Earnings in the first quarter were down 52 per cent at Savanna Energy Services Corp., 74 per cent at Ensign Energy Services Inc., 59 per cent at Atika Drilling Ltd., and 76 per cent at Precision Drilling Corp.
The reduced profits come as producers are extensively scaling back drilling. Last week, the Petroleum Services Association of Canada reduced its forecast for 2015 drilling by 47 per cent compared with what it expected in October 2014. The association now expects only 5,320 wells to be drilled across Canada this year, compared to 10,927 wells last year.
Whitmarsh said he doesn't see any recovery happening in the traditionally slow second quarter.
"Since the end of the quarter, activity levels have continued to be lower and we expect the second quarter to be quite weak," he said. "We expect the industry to remain challenged until commodity prices begin to improve."
Mike Mazar, an energy services analyst at BMO Capital Markets, says companies are struggling to make forecasts on what the rest of the year will look like.
"They're not really providing much in the way of what they think the second half holds, because they really don't know. And when you don't know, it's usually a bad sign," he said.
With business drying up, Mazar says companies have had no choice but to implement aggressive cost cutting.
"The only thing these services guys can do, and what they have been fairly effective in doing so far, is reducing costs," he said.
In the first two months of 2015, Trinidad reduced its global workforce by 42 per cent, leaving the company with 1,764 employees. The company also cut staff wages by seven per cent, executive pay by 10 per cent, and slashed its capital spending for the year in half to $175 million.
But Mazar says that with significant cuts already under way, it will be difficult for companies to cut further.
"They've cut to the bare bone to the extent that if you cut much further you're going to make it very challenging to ramp back up when things recover," he said.
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