Precision Drilling Trust reported its net profits fell to $139.7-million in the third quarter from nearly $1.4-billion last year, a period when the company booked a huge gain from the sale of assets.

Canada's largest oil and natural gas driller said Thursday it earned $1.11 a share for the quarter ended Sept. 30, compared with net profits of $11 a share in the same 2005 period.

The 2005 results, which came before Precision Drilling became a trust, were fattened by $1.38-billion in special gains from the sale of assets, mainly the company's international division.

In its latest quarter, revenues rose to $349.6-million from $300-million, but the company warned that its drilling business is being squeezed by lower natural gas prices, which has cut the number of gas wells being drilled in western Canada.

Meanwhile, the company said it generated record operating profits of $142.4-million for the third quarter, up from $111.9-million because of higher prices for contract drilling and well completion and production services.

“We can only do as well as our customers and we are working closely with them to ensure we respond to their needs in this market,” said Gene Stahl, president and chief operating officer of the trust.

“We are concentrating on the basics — customer focus, cost control and allocation of capital, and most importantly the welfare of our people.”

To close out the third quarter, the company noted that 1,784 new well licences were issued in September, the lowest industry total for that month since 2002.

In breaking down its operations, Precision said its drilling rig activity in October is averaging 48 per cent operating day utilization compared with 68 per cent in the 2005 fourth quarter.

While wet weather in October has contributed to the decline, the trust said the weakness in natural gas prices “has impacted the urgency with which customers are approaching their upcoming winter drilling programs.”

“In contrast to last year, there is more rig availability for the spot market and bidding for contracts has become more competitive,” the trust said.

“Natural gas accounts for about 70 per cent of Precision's activity in Canada and the drop in prices has slowed down drilling but the one-year forward strip on gas prices remains respectable,” added Mr. Stahl.

“What we are seeing is movement away from drilling shallow gas wells to deeper targets and a shift in our equipment utilization to our deeper rigs. It's a good example of how Precision can respond to the changing market.”