Enhanced Investments - Financial Portal

Published: 2023-03-06


	MANAGEMENT’S REPORT TO THE SHAREHOLDERS

The accompanying Consolidated Financial Statements and all information in this Annual Report are the responsibility of
management. The Consolidated Financial Statements have been prepared by management in accordance with the accounting
policies in the Notes to the Consolidated Financial Statements. When necessary, management has made informed judgements
and estimates in accounting for transactions that were not complete at reporting date. In the opinion of management, the
Consolidated Financial Statements have been prepared within acceptable limits of materiality and are in accordance with
International Financial Reporting Standards (			IFRS) as issued by the International Accounting Standards Board (IASB) and
appropriate in the circumstances. The financial information elsewhere in this Annual Report has been reviewed to ensure
consistency with that in the Consolidated Financial Statements.
Management has prepared the Management’s Discussion and Analysis (				MD&A). The MD&A is based on the financial results of
Precision Drilling Corporation (the					Corporation) prepared in accordance with IFRS as issued by the IASB. The MD&A compares

the audited financial results for the years ended December 31, 2022 and December 31, 2021.
Management is responsible for establishing and maintaining adequate internal control over the Corporation’s financial reporting
and is supported by an internal audit function that conducts periodic testing of these controls. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of Consolidated Financial Statements for external reporting purposes in accordance with IFRS. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may

deteriorate.
Under the supervision of, and with direction from, our principal executive officer and principal financial and accounting officer,
management conducted an evaluation of the effectiveness of the Corporation’s internal control over financial reporting.
Management’s evaluation of internal control over financial reporting was based on the Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (							COSO 2013). Based on this evaluation,
management concluded that the Corporation’s internal control over financial reporting was effective as of December 31, 2022.
Also, management determined that there were no material weaknesses in the Corporation’s internal control over financial
reporting as of December 31, 2022.
KPMG LLP (						KPMG), a Registered Public Accounting Firm, was engaged, as approved by a vote of shareholders at the
Corporation’s most recent annual meeting, to audit the Consolidated Financial Statements and provide an independent

professional opinion.
KPMG also completed an audit of the effectiveness of the Corporation’s internal control over financial reporting as of
December 31, 2022, as stated in its report included in this Annual Report and has expressed an unqualified opinion on the
effectiveness of internal control over financial reporting as of December 31, 2022.
The Audit Committee of the Board of Directors, which is comprised of five independent directors who are not employees of the
Corporation, provides oversight to the financial reporting process. Integral to this process is the Audit Committee’s review and
discussion with management and KPMG of the quarterly and annual financial statements and reports prior to their respective
release. The Audit Committee is also responsible for reviewing and discussing with management and KPMG major issues as to
the adequacy of the Corporation’s internal controls. KPMG has unrestricted access to the Audit Committee to discuss its audit
and related matters. The Consolidated Financial Statements have been approved by the Board of Directors and its Audit

Committee.


/s/ Kevin A. Neveu
	/s/ Carey T. Ford

Kevin A. Neveu	Carey T. Ford
President and Chief Executive Officer	Chief Financial Officer
Precision Drilling Corporation	Precision Drilling Corporation

March 3, 2023	March 3, 2023



	Precision Drilling Corporation 2022 Annual Report	1	42					Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRMTo the Shareholders and Board of Directors of Precision Dril ing Corporation: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial position of Precision Drilling Corporation and
subsidiaries (	the Corporation) as of December 31, 2022 and 2021, the related consolidated statements of loss, comprehensive
loss, changes in equity, and cash flow for the years then ended, and the related notes (collectively, the consolidated financial
statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Corporation as of December 31, 2022 and 2021, and the results of its financial performance and its cash flow for each of the
years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(	PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2022, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated March 3, 2023 expressed an unqualified opinion on the effectiveness of the Corporation’s
internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of indicators of impairment for the Contract Drilling cash generating units (CGUs) As discussed in notes 3(f), 3(s) and 7 to the consolidated financial statements, the Corporation reviews the carrying amount of
each of the cash generating units (CGUs) at each reporting date to determine whether an indicator of impairment exists based
on an analysis of relevant internal and external factors. The Corporation analyzes indicators that an asset may be impaired such
as financial performance of the CGUs compared to historical results and forecasts and consideration of the Corporation’s market
capitalization. The Corporation did not identify an indicator of impairment within the Corporation’s Contract Drilling CGUs as at
December 31, 2022. Accordingly, no impairment tests were performed on the Contract Drilling CGUs as at December 31, 2022.
Total assets recognized in the Contract Drilling CGUs at December 31, 2022 were approximately $2,575 million. We identified the assessment of indicators of impairment for the Corporation’s Contract Drilling CGUs as a critical audit matter.
Complex auditor judgement was required in evaluating the amount of earnings before income taxes, loss on redemption and
repurchase of unsecured senior notes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on
asset disposals and depreciation and amortization (		Adjusted EBITDA) budgeted for 2023 for the Contract Drilling CGUs, used
in the indicator of impairment assessment for comparison to the Adjusted EBITDA for 2022 and consideration of the
Corporation’s market capitalization on the Corporation’s impairment indicator assessment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested
the operating effectiveness of the internal control over the Corporation’s identification and evaluation of indicators that the
Contract Dril ing CGUs may be impaired, which includes the comparison of the Adjusted EBITDA budgeted for 2023 to the
Adjusted EBITDA for 2022, and the assessment of the Corporation’s market capitalization. We evaluated the Corporation’s 2023
budgeted Adjusted EBITDA for the Contract Drilling CGUs by comparing it to historical results considering the impact of changes
2	Consolidated Financial Statements		Precision Dril ing Corporation 2022 Annual Report	43

		in conditions and events affecting the Contract Drilling CGUs. We compared the Corporation’s 2022 budgeted Adjusted EBITDA
		for the Contract Drilling CGUs to actual results to assess the Corporation’s ability to accurately forecast. We evaluated the
		changes in market capitalization over the year and its impact on the Corporation’s impairment indicator analysis.
		/s/ KPMG LLP
		Chartered Professional Accountants We have served as the Corporation’s auditor since 1987. Calgary, Canada
		March 3, 2023
Precision Drilling Corporation 2022 Annual Report	3	44	Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Shareholders and Board of Directors of Precision Dril ing Corporation
Opinion on Internal Control Over Financial Reporting We have audited Precision Drilling Corporation’s and subsidiaries’ (
		the Corporation) internal control over financial reporting as
of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Corporation maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(	PCAOB), the consolidated statements of financial position of the Corporation as of December 31, 2022 and 2021, the related
consolidated statements of loss, comprehensive loss, changes in equity, and cash flow for the years then ended, and the related
notes (collectively, the consolidated financial statements), and our report dated March 3, 2023 expressed an unqualified opinion
on those consolidated financial statements. Basis for Opinion The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
to the Shareholders. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Chartered Professional Accountants Calgary, Canada
March 3, 2023
4	Consolidated Financial Statements	Precision Dril ing Corporation 2022 Annual Report	45

			CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
		CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
			December 31,		December 31,
		(Stated in thousands of Canadian dol ars)		2022	2021
		ASSETS
		Current assets:
		Cash	$	21,587 $	40,588
		Accounts receivable				(Note 25)	413,925	255,740
		Inventory		35,158	23,429
		Total current assets		470,670	319,757
		Non-current assets:
		Income taxes recoverable		1,602	—
		Deferred tax assets				(Note 14)	455	867
		Property, plant and equipment				(Note 7)	2,303,338	2,258,391
		Intangibles				(Note 8)	19,575	23,915
		Right-of-use assets				(Note 12)	60,032	51,440
		Investments and other assets		20,451	7,382
		Total non-current assets	2,405,453	2,341,995
		Total assets	$	2,876,123 $	2,661,752
		LIABILITIES AND EQUITY
		Current liabilities:
		Accounts payable and accrued liabilities				(Note 25)	$	392,053 $	224,123
		Income tax payable		2,991	839
		Current portion of lease obligations		12,698	10,935
		Current portion of long-term debt				(Note 9)	2,287	2,223
		Total current liabilities		410,029	238,120
		Non-current liabilities:
		Share-based compensation				(Note 13)	60,133	26,728
		Provisions and other				(Note 16)	7,538	6,513
		Lease obligations		52,978	45,823
		Long-term debt				(Note 9)	1,085,970	1,106,794
		Deferred tax liabilities				(Note 14)	28,946	12,219
		Total non-current liabilities	1,235,565	1,198,077
		Shareholders’ equity:
		Shareholders’ capital				(Note 17)	2,299,533	2,281,444
		Contributed surplus		72,555	76,311
		Deficit	(1,301,273 )	(1,266,980)
		Accumulated other comprehensive income				(Note 19)	159,714	134,780
		Total shareholders’ equity	1,230,529	1,225,555
		Total liabilities and shareholders’ equity	$	2,876,123 $	2,661,752
		See accompanying notes to consolidated financial statements.
		Approved by the Board of Directors:
							/s/ Wil iam T. Donovan	/s/ Steven W. Krablin
							William T. Donovan	Steven W. Krablin
							Director	Director
Precision Drilling Corporation 2022 Annual Report	5	46							Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF LOSS
Years ended December 31,
(Stated in thousands of Canadian dollars, except per share amounts)		2022	2021
Revenue				(Note 5)	$	1,617,194 $	986,847
Expenses:
Operating				(Note 10, 25)	1,124,601	698,144
General and administrative				(Note 10, 25)	180,988	95,931
Earnings before income taxes, loss on redemption and repurchase of		311,605	192,772
unsecured senior notes, loss (gain) on investments and other assets, finance
charges, foreign exchange, gain on asset disposals, and depreciation and
amortization
Depreciation and amortization				(Note 7, 8, 12)	279,035	282,326
Gain on asset disposals				(Note 7)	(29,926 )	(8,516)
Foreign exchange		1,278	393
Finance charges				(Note 11)	87,813	91,431
Loss (gain) on investments and other assets		(12,452 )	400
Loss on redemption and repurchase of unsecured senior notes		—		9,520
Loss before income taxes		(14,143 )	(182,782)
Income taxes:				(Note 14)
Current		4,362	3,203
Deferred		15,788	(8,599)
		20,150	(5,396)
Net loss					$	(34,293 ) $	(177,386)
Net loss per share:				(Note 18)
Basic					$	(2.53 ) $	(13.32)
Diluted					$	(2.53 ) $	(13.32)
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Years ended December 31,
(Stated in thousands of Canadian dollars)		2022	2021
Net loss					$	(34,293 ) $	(177,386)
Unrealized gain (loss) on translation of assets and liabilities of operations		106,669	(11,256)
denominated in foreign currency
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt		(81,735 )	8,455
Comprehensive loss					$	(9,359 ) $	(180,187)
See accompanying notes to consolidated financial statements.
6	Consolidated Financial Statements					Precision Dril ing Corporation 2022 Annual Report	47

		CONSOLIDATED STATEMENTS OF CASH FLOW
		Years ended December 31,
		(Stated in thousands of Canadian dollars)	2022	2021
		Cash provided by:
		Operations:
		Net loss		$	(34,293 ) $	(177,386)
		Adjustments for:
					Long-term compensation plans	60,094	31,952
					Depreciation and amortization	279,035	282,326
					Gain on asset disposals	(29,926 )	(8,516)
					Foreign exchange	638	1,733
					Finance charges	87,813	91,431
					Income taxes	20,150	(5,396)
					Other	542	(972)
					Loss (gain) on investments and other assets	(12,452 )	400
					Loss on redemption and repurchase of unsecured senior notes	—		9,520
					Income taxes paid	(3,263 )	(5,999)
					Income taxes recovered	24	48
					Interest paid	(85,678 )	(67,258)
					Interest received	310	360
		Funds provided by operations	282,994	152,243
		Changes in non-cash working capital balances				(Note 25)	(45,890 )	(13,018)
		Cash provided by operations	237,104	139,225
		Investments:
		Purchase of property, plant and equipment				(Note 7)	(184,250 )	(75,941)
		Proceeds on sale of property, plant and equipment	37,198	13,086
		Business acquisitions				(Note 4)	(10,200 )	—
		Purchase of investments and other assets	(617 )	(3,500)
		Changes in non-cash working capital balances				(Note 25)	13,454	9,742
		Cash used in investing activities	(144,415 )	(56,613)
		Financing:
		Issuance of long-term debt				(Note 9)	144,889	696,341
		Repayment of long-term debt				(Note 9)	(250,749 )	(824,871)
		Repurchase of share capital				(Note 17)	(10,010 )	(4,294)
		Debt amendment fees				(Note 8)	—		(913)
		Debt issue costs				(Note 9)	—		(9,450)
		Lease payments	(7,134 )	(6,726)
		Issuance of common shares on the exercise of options				(Note 17)	9,833	—
		Cash used in financing activities	(113,171 )	(149,913)
		Effect of exchange rate changes on cash	1,481	(883)
		Decrease in cash	(19,001 )	(68,184)
		Cash, beginning of year	40,588	108,772
		Cash, end of year		$	21,587 $	40,588
		See accompanying notes to consolidated financial statements.
Precision Drilling Corporation 2022 Annual Report	7	48						Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
					Accumulated
						Other
		Shareholders’			Comprehensive
			Capital	Contributed	Income
(Stated in thousands of Canadian dol ars)		(Note 17)		Surplus	(Note 19)		Deficit	Total Equity
Balance at January 1, 2022		$ 2,281,444 $		76,311	$	134,780 $ (1,266,980) $ 1,225,555
Net loss			—						—		—		(34,293)	(34,293)
Other comprehensive income			—						—	24,934	—	24,934
Share-based payment reclassification			14,083						(219)	—		—	13,864
Share repurchase			(10,010)						—	—		—	(10,010)
Share options exercised			14,016	(4,183)		—		—			9,833
Share-based compensation expense			—						646	—		—			646
Balance at December 31, 2022		$ 2,299,533 $		72,555 $	159,714 $ (1,301,273) $ 1,230,529
					Accumulated
						Other
		Shareholders’			Comprehensive
			Capital	Contributed	Income
(Stated in thousands of Canadian dol ars)		(Note 17)		Surplus	(Note 19)		Deficit	Total Equity
Balance at January 1, 2021		$ 2,285,738 $		72,915	$	137,581 $ (1,089,594) $ 1,406,640
Net loss			—						—	—		(177,386)	(177,386)
Other comprehensive income			—						—	(2,801 )	—	(2,801)
Share-based payment reclassification			—		(4,757)		—		—		(4,757)
Share repurchase			(4,294)						—	—		—	(4,294)
Share-based compensation expense			—						8,153	—		—			8,153
Balance at December 31, 2021		$ 2,281,444 $		76,311	$	134,780 $ (1,266,980) $ 1,225,555
See accompanying notes to consolidated financial statements.
8	Consolidated Financial Statements			Precision Dril ing Corporation 2022 Annual Report				49

		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts are stated in thousands of Canadian dollars except share numbers and per share amounts)
		NOTE 1. DESCRIPTION OF BUSINESS Precision Drilling Corporation (
			Precision or the Corporation) is incorporated under the laws of the Province of Alberta, Canada
		and is a provider of contract drilling and completion and production services primarily to oil and natural gas exploration and
		production companies in Canada, the United States and certain international locations. The address of the registered office is
		800, 525 – 8th Avenue S.W., Calgary, Alberta, Canada, T2P 1G1.
		NOTE 2. BASIS OF PREPARATION (a) Statement of ComplianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
		(	IFRS) as issued by the International Accounting Standards Board (IASB).
		These consolidated financial statements were authorized for issue by the Board of Directors on March 3, 2023. (b) Basis of MeasurementThe consolidated financial statements have been prepared using the historical cost basis and are presented in thousands of
		Canadian dollars. (c) Use of Estimates and JudgementsThe preparation of the consolidated financial statements requires management to make estimates and judgements that affect
		the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingencies. These estimates and
		judgements are based on historical experience and on various other assumptions that are believed to be reasonable under the
		circumstances. The estimation of anticipated future events involves uncertainty and, consequently, the estimates used in the
		preparation of the consolidated financial statements may change as future events unfold, more experience is acquired, or the
		Corporation’s operating environment changes. The Corporation reviews its estimates and assumptions on an ongoing basis.
		Adjustments that result from a change in estimate are recorded in the period in which they become known. Estimates are more
		difficult to determine, and the range of potential outcomes can be wider, in periods of higher volatility and uncertainty. The
		impacts of the COVID-19 pandemic and the recovery therefrom coupled with several factors including higher levels of uncertainty
		due the Russian invasion of Ukraine and its impact on energy markets, rising interest and inflation rates, and constrained supply
		chains have created a higher level of volatility and uncertainty. Management has, to the extent reasonable, incorporated known
		facts and circumstances into the estimates made, however, actual results could differ from those estimates and those differences
		could be material. Significant estimates and judgements used in the preparation of the consolidated financial statements are
		described in Note 3(d), (e), (f), (h), (i), (k), (q) and (s). Climate-related risks and opportunities may have a future impact on the Corporation and its estimates and judgements, including
		but not limited to the useful life and residual value of its property, plant and equipment and the measurement of projected cash
		flows when identifying impairment triggers, performing tests for impairment or impairment recoveries, when available, of non-
		financial assets. The Corporation evaluated the remaining useful lives and residual values of its property, plant and equipment, concluding they
		remain reasonable given the current estimate of the demand period for oil and natural gas extractive services well exceeds their
		remaining useful lives. In addition, the Corporation’s property, plant and equipment, including drill rig equipment, adapts to
		numerous low-carbon projects, including but not limited to, geothermal drilling, carbon capture and storage and the extraction of
		helium and hydrogen gas. In future periods, if indications of impairment of non-financial assets exist, the Corporation’s measurement of projected cash
		flows may be exposed to higher estimation uncertainty, including but not limited to the Corporation’s continued capital investment
		required to lower the carbon intensity of its property, plant and equipment, period and growth expectations used to calculate
		terminal values and the Corporation’s weighted average cost of capital.
		NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of ConsolidationThese consolidated financial statements include the accounts of the Corporation and all of its subsidiaries and partnerships,
		substantially all of which are wholly owned. The consolidated financial statements of the subsidiaries are prepared for the same
		period as the parent entity, using consistent accounting policies. All significant intercompany balances and transactions and any
		unrealized gains and losses arising from intercompany transactions, have been eliminated. Subsidiaries are entities controlled by the Corporation. Control exists when Precision has the power to govern the financial and
		operating policies of an entity to obtain benefits from its activities. In assessing control, potential voting rights that currently are
Precision Drilling Corporation 2022 Annual Report	9	50		Notes to Consolidated Financial Statements

exercisable are considered. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases. Precision does not hold investments in any companies where it exerts significant influence and does not hold interests in any
special-purpose entities. The acquisition method is used to account for acquisitions of subsidiaries and assets that meet the definition of a business under
IFRS. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities
incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over
the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized immediately in the
statement of earnings. Transaction costs, other than those associated with the issuance of debt or equity securities, that the
Corporation incurs in connection with a business combination are expensed as incurred. (b) CashCash consists of cash and short-term investments with original maturities of three months or less.(c) InventoryInventory is primarily comprised of operating supplies and carried at the lower of average cost, being the cost to acquire the
inventory, and net realizable value. Inventory is charged to operating expenses as items are sold or consumed at the amount of
the average cost of the item. (d) Property, Plant and EquipmentProperty, plant and equipment are carried at cost, less accumulated depreciation and any accumulated impairment losses.Cost includes an expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition
for their intended use, and borrowing costs on qualifying assets. The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Corporation, and its cost can be measured
reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and
equipment (repair and maintenance) are recognized in net earnings as incurred. Property, plant, and equipment are depreciated as follows:
				Basis of
		Expected Life	Salvage Value	Depreciation
Drilling rig equipment:
–	Power & Tubulars		5 years	–		straight-line
–	Dynamic		10 years	–		straight-line
–	Structural		20 years	10%	straight-line
Service rig equipment		20 years	10%	straight-line
Drilling rig spare equipment		up to 15 years	–		straight-line
Service rig spare equipment		up to 15 years	–		straight-line
Rental equipment		up to 15 years	0 to 25%	straight-line
Other equipment		3 to 10 years	–		straight-line
Light duty vehicles		4 years	–		straight-line
Heavy duty vehicles		7 to 10 years	–		straight-line
Buildings		10 to 20 years	–		straight-line
Property, plant and equipment are depreciated based on estimates of useful lives and salvage values. These estimates consider
data and information from various sources including vendors, industry practice, and Precision’s own historical experience and
may change as more experience is gained, market conditions shift, or technological advancements are made. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from
disposal to the carrying amount of property, plant and equipment, and are recognized in the consolidated statements of loss. Determination of which parts of the drilling rig equipment represent significant cost relative to the entire rig and identifying the
consumption patterns along with the useful lives of these significant parts, are matters of judgement. This determination can be
complex and subject to differing interpretations and views, particularly when rig equipment comprises individual components for
which different depreciation methods or rates are appropriate. The estimated useful lives, residual values and method and components of depreciation are reviewed annually, and adjusted
prospectively, if appropriate.
10	Notes to Consolidated Financial Statements				Precision Dril ing Corporation 2022 Annual Report	51

		(e) IntangiblesIntangible assets that are acquired by the Corporation with finite lives are initially recorded at estimated fair value and
		subsequently measured at cost less accumulated amortization and any accumulated impairment losses. Subsequent expenditures are capitalized only when they increase the future economic benefits of the specific asset to which
		they relate. Intangible assets are amortized based on estimates of useful lives. These estimates consider data and information from
		various sources including vendors and Precision’s own historical experience and may change as more experience is
		gained or technological advancements are made. Amortization is recognized in net earnings using the straight-line method over the estimated useful lives of the respective
		assets. Precision’s loan commitment fees are amortized over the term of the respective facility. Software is amortized over its
		expected useful life of up to 10 years.
		The estimated useful lives and methods of amortization are reviewed annually and adjusted prospectively if appropriate. (f) Impairment of Non-Financial AssetsThe carrying amounts of the Corporation’s non-financial assets, other than inventories and deferred tax assets, are reviewed at
		each reporting date to determine whether there is any indication of impairment. For the purpose of impairment testing, assets
		are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely
		independent of the cash inflows of other assets or groups of assets (the cash-generating unit or	CGU). Judgement is required
		in the aggregation of assets into CGUs. If any such indication exists, then the asset or CGU’s recoverable amount is estimated. Judgement is required when evaluating
		whether a CGU has indications of impairment. The recoverable amount of an asset or a CGU is the greater of its value in use and its fair value less costs to sell. In assessing
		value in use, the estimated future cash flows are discounted to their present value using an after-tax discount rate that reflects
		current market assessments of the time value of money and the risks specific to the asset. Value in use is generally computed
		by reference to the present value of the future cash flows expected to be derived from the CGU. An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its estimated recoverable amount.
		Impairment losses are recognized in net earnings. Impairment losses recognized in respect of CGUs are allocated first to
		reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of the other assets
		in the CGU on a pro-rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior
		years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
		loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
		have been determined, net of depreciation or amortization, if no impairment loss had been recognized. (g) Borrowing CostsInterest and borrowing costs that are directly attributable to the acquisition, construction or production of assets that take a
		substantial period of time to prepare for their intended use are capitalized as part of the cost of those assets. Capitalization
		ceases during any extended period of suspension of construction or when substantially all activities necessary to prepare the
		asset for its intended use are complete. All other interest and borrowing costs are recognized in net earnings in the period in which they are incurred. (h) Income TaxesIncome tax expense is recognized in net earnings except to the extent that it relates to items recognized directly in equity, in
		which case it is recognized in equity. Current tax is the expected tax payable or receivable on the taxable earnings or loss for the year, using tax rates enacted or
		substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized using the asset and liability method, providing for temporary differences between the carrying
		amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is
		not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition,
		deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is
		measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that
		have been enacted or substantively enacted at the reporting date. The effect of a change in tax rates on deferred tax assets
		and liabilities is recognized in net earnings in the period that includes the date of enactment or substantive enactment.
		Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset and they relate to taxes levied by
		the same tax authority on the same taxable entity, or on different tax entities that are expected to settle current tax liabilities
		and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Precision Drilling Corporation 2022 Annual Report	11	52		Notes to Consolidated Financial Statements

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realized. The Corporation is subject to taxation in numerous jurisdictions. Uncertainties exist with respect to the interpretation of complex
tax regulations and require significant judgement. Differences arising between the actual results and the assumptions made, or
future changes to such assumptions, could necessitate future adjustments to taxable income and expense already recorded.
The Corporation establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax
authorities of the respective countries in which it operates. The amount of such provisions are based on various factors, such
as the experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible
tax authority. (i) Revenue from Contracts with CustomersPrecision recognizes revenue from a variety of sources. In general, customer invoices are issued upon rendering all performance
obligations for an individual wel -site job. Under the Corporation’s standard contract terms, customer payments are to be received
within 30 days of the customer’s receipt of an invoice.
Contract Drilling Services The Corporation contracts individual drilling rig packages, including crews and support equipment, to its customers.
Depending on the customer’s drilling program, contracts may be for a single well, multiple wel s or a fixed term. Revenue
from contract drilling services is recognized over time from spud to rig release on a daily basis. Operating days are
measured through industry standard tour sheets that document the daily activity of the rig. Revenue is recognized at the
applicable day rate for each well, based on rates specified in the dril ing contract. The Corporation provides services under turnkey contracts, whereby Precision is required to drill a well to an agreed upon
depth under specified conditions for a fixed price, regardless of the time required or problems encountered in drilling the
well. Revenue from turnkey drilling contracts is recognized over time using the input method based on costs incurred to
date in relation to estimated total contract costs, as that most accurately depicts the Corporation’s performance. Completion and Production Services The Corporation provides a variety of well completion and production services including well servicing. In general, service
rigs do not involve long-term contracts or penalties for termination. Revenue is recognized daily upon completion of
services. Operating days are measured through daily tour sheets and field tickets. Revenue is recognized at the applicable
daily or hourly rate, as stipulated in the contract. The Corporation offers its customers a variety of oilfield equipment for rental. Rental revenue is recognized daily at the
applicable rate stated in the rental contract. Rental days are measured through field tickets. The Corporation provides accommodation and catering services to customers in remote locations. Customers contract
these services either as a package or individually for a fixed term. For accommodation services, the Corporation supplies
camp equipment and revenue is recognized over time on a daily basis, once the equipment is on-site and available for
use, at the applicable rate stated in the contract. For catering services, the Corporation recognizes revenue daily according
to meals served. Accommodation and catering services provided are measured through field tickets.
(j) Employee Benefit PlansPrecision sponsors various defined contribution retirement plans for its employees. The Corporation’s contributions to defined
contribution plans are expensed as employees earn the entitlement. (k) ProvisionsProvisions are recognized when the Corporation has a present obligation as a result of a past event, when it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate can be
made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the
end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash
flows. (l) Share-Based Incentive Compensation PlansThe Corporation has established several cash-settled share-based incentive compensation plans for non-management directors,
officers, and other eligible employees. The estimated fair value of amounts payable to eligible participants under these plans are
recognized as an expense with a corresponding increase in liabilities over the period that the participants become unconditionally
entitled to payment. The recorded liability is re-measured at the end of each reporting period until settlement with the resultant
change to the fair value of the liability recognized in net earnings for the period. When the plans are settled, the cash paid
reduces the outstanding liability.
12	Notes to Consolidated Financial Statements	Precision Dril ing Corporation 2022 Annual Report	53

		The Corporation has an employee share purchase plan that allows eligible employees to purchase common shares through
		payroll deductions. Prior to January 1, 2012, the Corporation had an equity-settled deferred share unit plan whereby non-management directors of
		Precision could elect to receive all or a portion of their compensation in fully-vested deferred share units. Compensation expense
		was recognized based on the fair value price of the Corporation’s shares at the date of grant with a corresponding increase to
		contributed surplus. Upon redemption of the deferred share units into common shares, the amount previously recognized in
		contributed surplus is recorded as an increase to shareholders’ capital. The Corporation continues to have obligations under
		this plan. The Corporation has a share option plan for certain eligible employees. Under this plan, the fair value of share purchase options
		is calculated at the date of grant using the Black-Scholes option pricing model, and that value is recorded as compensation
		expense over the grant’s vesting period with an offsetting credit to contributed surplus. A forfeiture rate is estimated on the grant
		date and is adjusted to reflect the actual number of options that vest. Upon exercise of the equity purchase option, the associated
		amount is reclassified from contributed surplus to shareholders’ capital. Consideration paid by employees upon exercise of the
		equity purchase options is credited to shareholders’ capital. (m) Foreign Currency TranslationTransactions of the Corporation’s individual entities are recorded in the currency of the primary economic environment in which
		it operates (its functional currency). Transactions in currencies other than the entities’ functional currency are translated at rates
		in effect at the time of the transaction. At each period end, monetary assets and liabilities are translated at the prevailing period-
		end rates. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Gains
		and losses are included in net earnings except for gains and losses on translation of long-term debt designated as a hedge of
		foreign operations, which are deferred and included in other comprehensive income. For the purpose of preparing the Corporation’s consolidated financial statements, the financial statements of each foreign
		operation that does not have a Canadian dollar functional currency are translated into Canadian dollars. Assets and liabilities
		are translated at exchange rates in effect at the period end date. Revenues and expenses are translated using average exchange
		rates for the month of the respective transaction. Gains or losses resulting from these translation adjustments are recognized
		initially in other comprehensive income and reclassified from equity to net earnings on disposal or partial disposal of the foreign
		operation. (n) Per Share AmountsBasic per share amounts are calculated using the weighted average number of shares outstanding during the period. Diluted
		per share amounts are calculated by using the treasury stock method for equity-based compensation arrangements. The
		treasury stock method assumes that any proceeds obtained on exercise of equity-based compensation arrangements would be
		used to purchase common shares at the average market price during the period. The weighted average number of shares
		outstanding is then adjusted by the difference between the number of shares issued from the exercise of equity-based
		compensation arrangements and shares repurchased from the related proceeds. (o) Financial Instruments
			i) Non-Derivative Financial Instruments:Financial assets and liabilities are classified and measured at amortized cost, fair value through other comprehensive
			income or fair value through net earnings. The classification of financial assets and liabilities is general y based on the
			business model in which the asset or liability is managed and its contractual cash flow characteristics. Financial assets
			held within a business model whose objective is to collect contractual cash flows and whose contractual terms give rise
			to cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding are
			measured at amortized cost. After their initial fair value measurement, accounts receivable, accounts payable and accrued
			liabilities and long-term debt are classified and measured at amortized cost using the effective interest rate method. Upon initial recognition of a non-derivative financial asset, a loss allowance is recorded for Expected Credit Losses (
	ECL).
			Loss allowances for trade receivables are measured based on lifetime ECL that incorporates historical loss information
			and is adjusted for current economic and credit conditions. ii) Derivative Financial Instruments:The Corporation may enter into certain financial derivative contracts in order to manage the exposure to market risks from
			fluctuations in interest rates or exchange rates. These instruments are not used for trading or speculative purposes.
			Precision has not designated its financial derivative contracts as effective accounting hedges, and thus has not applied
			hedge accounting, even though it considers certain financial contracts to be economic hedges. As a result, financial
			derivative contracts are classified as fair value through net earnings and are recorded on the statement of financial position
			at estimated fair value. Transaction costs are recognized in net earnings when incurred.
Precision Drilling Corporation 2022 Annual Report	13	54		Notes to Consolidated Financial Statements

Derivatives embedded in financial assets are never separated. Rather, the financial instrument as a whole is assessed for
classification. Derivatives embedded in financial liabilities are separated from the host contract and accounted for
separately when their economic characteristics and risks are not closely related to the host contract. Embedded derivatives
in financial liabilities are recorded on the statement of financial position at estimated fair value and changes in the fair
value are recognized in earnings.
(p) Hedge AccountingThe Corporation utilizes foreign currency long-term debt to hedge its exposure to changes in the carrying values of the
Corporation’s net investment in certain foreign operations from fluctuations in foreign exchange rates. To be accounted for as a
hedge, the foreign currency long-term debt must be designated and documented as a hedge and must be effective at inception
and on an ongoing basis. The documentation defines the relationship between the foreign currency long-term debt and the net
investment in the foreign operations, as well as the Corporation’s risk management objective and strategy for undertaking the
hedging transaction. The Corporation formally assesses, both at inception and on an ongoing basis, whether the changes in fair
value of the foreign currency long-term debt is highly effective in offsetting changes in fair value of the net investment in the
foreign operations. The portion of gains or losses on the hedging item determined to be an effective hedge is recognized in other
comprehensive income, net of tax, and is limited to the translation gain or loss on the net investment, while ineffective portions
are recorded through net earnings. A reduction in the fair value of the net investment in the foreign operations or increase in the foreign currency long-term debt
balance may result in a portion of the hedge becoming ineffective. If the hedging relationship ceases to be effective or is
terminated, hedge accounting is not applied to subsequent gains or losses. The amounts recognized in other comprehensive
income are reclassified to net earnings and the corresponding exchange gains or losses arising from the translation of the foreign
operation are recorded through net earnings upon dissolution or substantial dissolution of the foreign operation. (q) LeasesAt inception, Precision assesses whether its contracts contain a lease. A contract contains a lease if it conveys the right to
control the use of an identified asset for a period of time in exchange for consideration. The assessment of whether a contract
conveys the right to control the use of an identified asset considers whether: •
the contract involves the use of an identified asset and the substantive substitution rights of the supplier. If the supplier has
a substantive substitution right, then the asset is not identified;
•	the lessee’s right to obtain substantially all of the economic benefits from the use of the asset; and
•	the lessee’s right to direct the use of the asset, including decision-making to change how and for what purpose the asset is
used.
At inception or on reassessment of a contract that contains a lease component, Precision al ocates the consideration in the
contract to each lease component on the basis of their relative stand-alone prices. Leases in which Precision is a lessee Precision recognizes a right-of-use asset and corresponding lease obligation at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease obligation adjusted for lease payments made
on or before the commencement date, incurred initial direct costs, estimated site retirement costs and any lease incentives
received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets
are consistent with those of property, plant and equipment. In addition, the right-of-use asset is reduced by impairment losses,
if any, and adjusted for certain remeasurements of the lease obligation. The lease obligation is initial y measured at the present value of the minimum lease payments not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Precision’s incremental
borrowing rate. Generally, Precision uses its incremental borrowing rate as the discount rate for those leases in which it is the
lessee. Lease payments included in the measurement of the lease obligation comprise the following: •
fixed payments, including in-substance fixed payments;
•	variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
•	amounts expected to be payable under a residual value guarantee; and
14	Notes to Consolidated Financial Statements	Precision Dril ing Corporation 2022 Annual Report	55

		•	the exercise price under a purchase option that Precision is reasonably certain to exercise, lease payments in an optional
		renewal period if Precision is reasonably certain to exercise an extension option, and penalties for early termination of a
		lease unless Precision is reasonably certain not to terminate early.
		The lease obligation is measured at amortized cost using the effective interest method. The measurement of lease obligations
		requires the use of certain estimates and assumptions including discount rates, exercise of lease term extension options, and
		escalating lease rates. It is remeasured when there is a change in: •
		future lease payments arising from a change in an index or rate;
		•	the estimated amount expected to be payable under a residual value guarantee; or
		•	the assessment of whether Precision will exercise a purchase, extension or termination option.
		When the lease obligation is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-
		of-use asset, or is recorded in net earnings if the carrying amount of the right-of-use asset has been reduced to zero. Leases in which Precision is a lessor When Precision acts as a lessor, at inception, Precision evaluates the classification as either a finance or operating lease. To classify each lease, Precision makes an overall assessment of whether the lease transfers substantially all of the risks and
		rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an
		operating lease. When acting as a sub-lessor, Precision accounts for its interests in the head lease and the sub-lease separately. It assesses
		the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to
		the underlying asset. If a head lease is a short-term lease then Precision classifies the sub-lease as an operating lease. If an arrangement contains lease and non-lease components, Precision applies IFRS 15 to allocate the consideration in the
		contract. Precision recognizes lease payments received under operating leases for drilling rigs as income on a systematic basis,
		drilling days, over the lease term as part of revenue. (r) Government Assistance and GrantsPrecision may receive government grants in the form of transfers of resources in return for past or future compliance with certain
		conditions relating to operating activities. Government grants are recognized once there is reasonable assurance that Precision
		will comply with the attached conditions and grants will be received. Government grants are recognized in net earnings on a
		systematic basis over the periods in which Precision recognizes expenses related to costs for which the grants are intended to
		compensate.	(s) Critical Accounting Assumptions and Estimates
			i) Impairment of Long-Lived AssetsAt each reporting date, the Corporation reviews the carrying amount of assets in each CGU to determine whether an
			indicator of impairment exists. The Corporation’s analysis is based on relevant internal and external factors that indicate
			a CGU may be impaired such as the obsolescence or planned disposal of significant assets, financial performance of the
			CGU compared to forecasts, with a focus upon earnings before income tax, loss on redemption and repurchase of
			unsecured senior notes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset
			disposals, and depreciation and amortization (	Adjusted EBITDA), and consideration of the Corporation’s market
			capitalization. When indications of impairment exist within a CGU, a recoverable amount is determined which requires assumptions to
			estimate future discounted cash flows. These estimates and assumptions include future drilling activity and margins and
			the resulting estimated Adjusted EBITDA associated with the CGU and the discount rate used to present value the
			estimated cash flows. In selecting a discount rate, the Corporation uses observable market data inputs to develop a rate
			that the Corporation believes approximates the discount rate of market participants. Although the Corporation believes the assumptions and estimates are reasonable and consistent with current conditions,
			internal planning, and expected future operations, such assumptions and estimations are subject to significant uncertainty
			and judgement. ii) Income TaxesSignificant estimation and assumptions are required in determining the provision for income taxes. The recognition of
			deferred tax assets in respect of deductible temporary differences and unused tax losses and credits is based on the
			Corporation’s estimation of future taxable profit against which these differences, losses and credits may be used. The
			assessment is based upon existing tax laws and estimates of the Corporation’s future taxable income. These estimates
			may be materially different from the actual final tax return in future periods.
Precision Drilling Corporation 2022 Annual Report	15	56		Notes to Consolidated Financial Statements

(t) Accounting Standards and Amendments not yet EffectiveThe IASB has issued several new standards and amendments to existing standards that will become effective for periods
subsequent to December 31, 2022. Accordingly, these new standards and amendments were not applied when preparing these
consolidated financial statements. For each standard, Precision has assessed or is in the process of assessing the impact these
new standards and amendments will have on its consolidated financial statements.
		Effective for periods	Impact to Precision
Standards and Amendments		beginning on or after	Drilling Corporation
IFRS 17 Insurance Contracts and Amendments to IFRS 17		January 1, 2023	Review in-progress
Definition of Accounting Estimates (Amendments to IAS 8)		January 1, 2023	Review in-progress
Deferred Tax related to Assets and Liabilities arising from a Single		January 1, 2023	Review in-progress
Transaction (Amendments to IAS 12)
Disclosure of Accounting Policies (Amendments of IAS 1)		January 1, 2023	Review in-progress
Classification of liabilities as current or non-current (Amendments to		January 1, 2024	Review in-progress
IAS 1)
NOTE 4. BUSINESS COMBINATION On July 27, 2022, Precision acquired the well servicing business and associated rental assets of High Arctic Energy Services
Inc. for consideration of $38 million. On the date of acquisition, Precision made a $10 million cash payment with the remaining
balance of $28 million, included in accounts payable and accrued liabilities at December 31, 2022, and subsequently paid in the
first quarter of 2023. Included in the Completion and Production Services operating segment, the acquisition increased the size and scale of
Precision’s operations within the Canadian well servicing industry, adding well-service rigs to its fleet along with related rental
assets, ancil ary support equipment, inventories, spares and operating facilities in key operating basins. The acquisition was accounted for as a business combination, using the acquisition method, whereby the Acquired Assets and
Assumed Liabilities (				Acquired Net Assets) were recorded at their estimated fair values at the date of acquisition. Precision
relied on a third-party appraisal when determining the fair value of the Acquired Net Assets. Precision incurred $1 million of various transaction costs related to the business combination, which were recognized as an
expense in the statement of net loss. These costs were primarily related to advisory, legal, consulting and other transaction
costs. The following table summarizes the allocation of the purchase price:
(Stated in thousands of Canadian dol ars)
Cash			$		10,200
Accounts payable and accrued liabilities					27,300
Fair value of consideration transferred			$		37,500
Acquired Assets
Rig equipment			$		32,796
Vehicles					900
Buildings					1,457
Land					2,347
Right-of-use assets					6,990
Assumed Liabilities
Lease obligations					(6,990)
Fair value of Acquired Net Assets			$		37,500
Since the date of acquisition, depreciation of the acquired property, plant and equipment was recognized in the statement of net
loss in accordance with Precision’s existing depreciation policies for similar equipment types.
16	Notes to Consolidated Financial Statements					Precision Dril ing Corporation 2022 Annual Report	57

		NOTE 5. REVENUE The following table includes a reconciliation of disaggregated revenue by reportable segment (Note 6). Revenue has been
		disaggregated by primary geographical market and type of service provided.
				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
		Year ended December 31, 2022	Services	Services		and Other		Eliminations	Total
		United States							$	727,544 $	18,129 $						—	$	(43 ) $	745,630
		Canada	562,586	169,042						—		(6,068 )	725,560
		International	146,004		—						—		—		146,004
									$	1,436,134 $	187,171 $						—	$	(6,111 ) $	1,617,194
		Day rate/hourly services							$	1,394,394 $	187,171 $						—	$	(748 ) $	1,580,817
		Shortfall payments/idle but contracted	2,153					—						—		—		2,153
		Turnkey drilling services	31,723					—						—		—		31,723
		Other	7,864					—						—		(5,363 )	2,501
									$	1,436,134 $	187,171 $						—	$	(6,111 ) $	1,617,194
				Completion
			Contract		and		Inter-
DrillingProductionCorporateSegment
		Year ended December 31, 2021	Services	Services		and Other		Eliminations	Total
		United States							$	385,330 $	12,700 $						— $	(6 ) $	398,024
		Canada	347,562	100,788						—		(4,578 )	443,772
		International	145,051		—					—	—		145,051
									$	877,943 $	113,488 $						— $	(4,584 ) $	986,847
		Day rate/hourly services							$	845,832 $	113,488 $						— $	(462 ) $	958,858
		Shortfall payments/idle but contracted	543					—					—	—		543
		Turnkey drilling services	17,086					—					—	—		17,086
		Directional services(1)	7,871					—						—		—		7,871
		Other	6,611					—					—	(4,122 )	2,489
									$	877,943 $	113,488 $						— $	(4,584 ) $	986,847
		(1) Directional drilling disposed in the third quarter of 2021.
		NOTE 6. SEGMENTED INFORMATION The Corporation operates primarily in Canada, the United States and certain international locations, in two industry segments;
		Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, procurement
		and distribution of oilfield supplies, and the manufacture, sale and repair of drilling equipment. Completion and Production
		Services includes service rigs, oilfield equipment rental, and camp and catering services.
				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
		Year ended December 31, 2022	Services	Services		and Other		Eliminations	Total
		Revenue		$	1,436,134 $	187,171 $						—	$	(6,111 ) $	1,617,194
		Earnings before income taxes, loss on redemption	397,753	38,147		(124,295)	—		311,605
		and repurchase of unsecured senior notes, loss
		(gain) on investments and other assets, finance
		charges, foreign exchange, gain on asset
		disposals, and depreciation and amortization
		Depreciation and amortization	255,286	14,381		9,368	—		279,035
		Gain on asset disposals	(25,495)		(3,233)	(1,198)	—		(29,926)
		Total assets	2,574,867	179,226		122,030	—		2,876,123
		Capital expenditures	177,844		5,325	1,081	—		184,250
Precision Drilling Corporation 2022 Annual Report	17	58									Notes to Consolidated Financial Statements

			Completion
		Contract		and		Inter-
		Drilling	Production		Corporate	Segment
Year ended December 31, 2021		Services	Services		and Other		Eliminations	Total
Revenue									$	877,943 $	113,488 $					— $	(4,584 ) $	986,847
Earnings before income taxes, loss on redemption		231,532	23,807		(62,567)	—			192,772
and repurchase of unsecured senior notes, loss
(gain) on investments and other assets, finance
charges, foreign exchange, gain on asset
disposals, and depreciation and amortization
Depreciation and amortization		256,072	15,405		10,849	—			282,326
Gain on asset disposals		(7,673)		(525)	(318)	—			(8,516)
Total assets		2,392,382	127,233		142,137	—			2,661,752
Capital expenditures		70,998		4,452						491	—			75,941
A reconciliation of earnings before income taxes, loss on redemption and repurchase of unsecured senior notes, loss (gain) on
investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization
to net loss is as follows:
						2022		2021
Earnings before income taxes, loss on redemption								$	311,605 $		192,772
and repurchase of unsecured senior notes, loss
(gain) on investments and other assets, finance
charges, foreign exchange, gain on asset
disposals, and depreciation and amortization
Deduct:
Depreciation and amortization						279,035		282,326
Gain on asset disposals						(29,926 )		(8,516)
Foreign exchange						1,278		393
Finance charges						87,813		91,431
Loss (gain) on investments and other assets						(12,452 )		400
Loss on redemption and repurchase of unsecured						—			9,520
senior notes
Income taxes						20,150		(5,396)
Net loss								$	(34,293 ) $		(177,386)
The Corporation’s operations are carried on in the following geographic locations:
Year ended December 31, 2022		United States			Canada		International	Total
Revenue		$	745,630	$	725,560					$	146,004 $		1,617,194
Total assets											1,376,413	1,056,093	443,617		2,876,123
Year ended December 31, 2021		United States			Canada		International	Total
Revenue		$	398,024	$	443,772					$	145,051 $		986,847
Total assets											1,247,173	959,163	455,416		2,661,752
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
							2022	2021
Cost					$					6,906,771	$		6,503,721
Accumulated depreciation										(4,603,433 )	(4,245,330)
					$					2,303,338	$		2,258,391
Rig equipment										2,083,446	2,074,185
Rental equipment							15,977	20,597
Other equipment							11,465	17,088
Vehicles							3,380	3,204
Buildings							38,949	44,009
Assets under construction							117,535	67,884
Land							32,586	31,424
					$					2,303,338	$		2,258,391
18	Notes to Consolidated Financial Statements		Precision Dril ing Corporation 2022 Annual Report					59


Cost

							Assets

					Rig	Rental					Other	Under
								Land
					Equipment	Equipment	Equipment Vehicles Buildings							Construction	Total
Balance, December 31, 2020				$ 6,025,767 $ 105,024 $ 181,004 $ 35,350 $122,278 $			60,572 $ 33,211 $6,563,206
Additions					15,288	—					254			—	—	60,399				—	75,941
Disposals				(100,004)	(1,822)					(2,300)			(543) (2,454)	—	(1,674) (108,797)
Reclassifications					47,080	—					188			—	—	(47,268 )				—	—
Foreign exchange				(19,815)	(21)					(429)			(127)		(305)	(5,819 ) (113)	(26,629)
Balance, December 31, 2021				5,968,316	103,181					178,717			34,680 119,519	67,884 31,424 6,503,721
Additions					63,058	587					517			—		141	122,271				—	186,574
Acquisitions					32,796	—					—			900		1,457	—	2,347	37,500
Disposals				(71,912)	(7,538)					(8,358)			(873)		(9,461)	2 (2,187)	(100,327)
Reclassifications					74,148	—					188			—	—	(74,336 )				—	—
Foreign exchange				268,056	224					4,345			1,295		2,667	1,714 1,002	279,303
Balance, December 31, 2022				$ 6,334,462 $ 96,454 $ 175,409 $ 36,002 $114,323 $ 117,535 $ 32,586 $6,906,771

Accumulated Depreciation

							Assets
					Rig	Rental					Other	Under
					Equipment									Equipment	Equipment Vehicles Buildings						Construction	Land	Total
Balance, December 31, 2020				$ 3,755,973 $ 77,665 $ 153,686 $ 30,372 $ 72,827 $			—	$			— $4,090,523
Depreciation expense				248,564	6,741					10,410 1,739 4,582	—			— 272,036
Disposals				(95,977)	(1,804)					(2,194)			(543) (1,769)	—				— (102,287)
Foreign exchange				(14,429)	(18)					(273)			(92)	(130)	—				—		(14,942)
Balance, December 31, 2021				3,894,131	82,584 161,629 31,476 75,510						—			— 4,245,330
Depreciation expense				250,885	5,196					6,894			875 4,252	—				— 268,102
Disposals				(66,452)	(7,522)					(8,357)			(873) (5,793)	—				—	(88,997)
Foreign exchange				172,452	219					3,778 1,144 1,405	—			— 178,998
Balance, December 31, 2022				$ 4,251,016 $ 80,477 $ 163,944 $ 32,622 $ 75,374 $			—	$			—	$4,603,433

(a) Impairment Precision reviews the carrying value of its long-lived assets for indications of impairment at the end of each reporting period. At
December 31, 2022, Precision reviewed each of its cash-generating units and did not identify indications of impairment and,
therefore, did not test its CGUs for impairment. (b) Asset Additions In 2022, Precision purchased $184 million (2021 – $76 million) of property, plant and equipment and completed $2 million (2021
– nil) non-cash equipment swaps resulting in total asset additions of $187 mil ion (2021 – $76 mil ion). (c) Asset Disposals Through the completion of normal course business operations, the Corporation sold used assets incurring gains or losses on
disposal resulting in a net gain on asset disposal of $30 million (2021 – $9 million). During 2021, Precision sold its directional drilling business to Cathedral Energy Services Ltd. (
									Cathedral), along with $3 million
of cash for a purchase price of $6 million, resulting in a gain on disposal of $1 million. The purchase price was satisfied through
the issuance of 13,400,000 Cathedral common shares, along with warrants to purchase an additional 2,000,000 Cathedral
common shares at a price of $0.60 per common share within a two-year period. The Cathedral common shares and share
purchase warrants held by Precision are presented as long-term investments and other assets and will be revalued at each
reporting period using Level I and II inputs, respectively. For the year ended December 31, 2022, Precision recognized a gain
on investments and other assets of $12 million (2021 – $0.4 million loss), pertaining primarily to the revaluation of the Cathedral
common shares and warrants.


	Precision Drilling Corporation 2022 Annual Report	19	60			Notes to Consolidated Financial Statements

NOTE 8. INTANGIBLES

		2022	2021
Cost				$	55,111 $	55,108
Accumulated amortization		(35,536 )	(31,193)
				$	19,575 $	23,915

Loan commitment fees related to Senior Credit Facility				$	1,408 $	2,067
Software		18,167	21,848
				$	19,575 $	23,915

Cost

				Loan
						Commitment
						Fees	Software						Total
Balance, December 31, 2020						$	16,168				$	38,021 $	54,189
Additions				913			—		913
Foreign exchange				—			6	6
Balance, December 31, 2021				17,081	38,027	55,108
Additions							—			—		—
Foreign exchange				—			3	3
Balance, December 31, 2022						$	17,081				$	38,030 $	55,111

Accumulated Amortization

				Loan
						Commitment

				Fees	Software	Total
Balance, December 31, 2020						$	14,059				$	12,464 $	26,523
Amortization expense				955	3,715	4,670
Balance, December 31, 2021				15,014	16,179	31,193
Amortization expense				659	3,668	4,327
Foreign exchange				—					16	16
Balance, December 31, 2022						$	15,673				$	19,863 $	35,536



NOTE 9. LONG-TERM DEBT

									2022	2021	2022	2021
								Canadian Facilities and Translated
										U.S. Denominated Facilities	U.S. Facilities

Current Portion of Long-Term Debt
Canadian Real Estate Credit Facility											US $	— US $	—	$	1,333 $	1,333
U.S. Real Estate Credit Facility									704	704	954	890
											US $	704 US $	704	$	2,287 $	2,223

Long-Term Debt
Senior Credit Facility											US $	44,000 US $	118,000	$	59,620 $	149,206
Canadian Real Estate Credit Facility									—	—	16,334	17,667
U.S. Real Estate Credit Facility									8,389	9,093	11,368	11,498
Unsecured Senior Notes:
7.125% senior notes due 2026									347,765	347,765	471,225	439,735
6.875% senior notes due 2029									400,000	400,000	542,004	505,784
											US $	800,154 US $	874,858	1,100,551	1,123,890
Less net unamortized debt issue costs		(14,581 )	(17,096)
				$	1,085,970 $	1,106,794



20	Notes to Consolidated Financial Statements								Precision Dril ing Corporation 2022 Annual Report	61

			Canadian		Debt Issue
			Real	U.S. Real	Costs and
Senior	Unsecured			Estate	Estate	Original
Credit		Senior	Credit	Credit	Issue
FacilityNotesFacility	Facility	Discount	Total
						Balance December 31, 2020	$ 95,041 $1,141,638 $	— $ 13,370 $ (12,943) $1,237,106
						Changes from financing cash flows:
						Proceeds from unsecured senior notes	—		482,064						—	—					—	482,064
						Proceeds from Senior Credit Facility	194,277	—						—	—					—	194,277
						Proceeds from Real Estate Credit Facility	—			—		20,000		—					—		20,000
						Repayment of unsecured senior notes	—		(676,058)						—	—					—	(676,058)
						Repayment of Senior Credit Facility	(146,930)	—						—	—					—	(146,930)
						Repayment of Real Estate Credit Facility	—		—	(1,000)	(883 )					—	(1,883)
						Payment of debt issue costs	—			—						—		—		(9,450)	(9,450)
						Non-cash changes:
						Loss on redemption and repurchase of unsecured	—			9,520						—		—					—	9,520
						senior notes
						Amortization of debt issue costs	—		—						—	—		8,720	8,720
						Original issue discount	—		3,628						—	—		(3,427)	201
						Foreign exchange	6,818		(15,273)						—		(99 )	4	(8,550)
						Balance December 31, 2021	$ 149,206 $ 945,519 $ 19,000 $ 12,388 $ (17,096) $1,109,017
						Current	—		—	1,333							890	—	2,223
						Long-term	149,206	945,519	17,667	11,498	(17,096)	1,106,794
						Balance December 31, 2021	$ 149,206 $ 945,519 $ 19,000 $ 12,388 $ (17,096) $1,109,017
						Changes from financing cash flows:
						Proceeds from Senior Credit Facility	144,889	—						—	—					—	144,889
						Repayment of Senior Credit Facility	(248,500)	—						—		—					—		(248,500)
						Repayment of Real Estate Credit Facility	—		—	(1,333)	(916 )					—	(2,249)
						Non-cash changes:
						Amortization of debt issue costs	—		—						—	—		2,528	2,528
						Foreign exchange	14,025		67,710						—		850	(13)	82,572
						Balance December 31, 2022	$ 59,620 $1,013,229 $ 17,667 $ 12,322 $ (14,581) $1,088,257
						Current	—		—	1,333							954	—	2,287
						Long-term	59,620		1,013,229	16,334	11,368	(14,581)	1,085,970
						Balance December 31, 2022	$ 59,620 $1,013,229 $ 17,667 $ 12,322 $ (14,581) $1,088,257
						Precision’s current and long-term debt obligations at December 31, 2022 will mature as follows:
						2023	$	2,287
						2024	2,287
						2025	71,367
						2026	484,893
						Thereafter	542,004
					$	1,102,838
						(a) Senior Credit Facility:The senior secured revolving credit facility (
											Senior Credit Facility) provides Precision with senior secured financing for general
						corporate purposes, including for acquisitions, of up to US$500 million with a provision for an increase in the facility of up to an
						additional US$300 million. The Senior Credit Facility is secured by charges on substantially all of the present and future assets
						of Precision, its material U.S. and Canadian subsidiaries and, if necessary, to adhere to covenants under the Senior Credit
						Facility, certain subsidiaries organized in jurisdictions outside of Canada and the U.S. The Senior Credit Facility has a term of
						four years, with an annual option on Precision’s part to request that the lenders extend, at their discretion, the facility to a new
						maturity date not to exceed five years from the date of the extension request. The Senior Credit Facility requires Precision comply with certain restrictive and financial covenants including a leverage ratio of
						consolidated senior debt to consolidated Covenant EBITDA (as defined in the debt agreement) of less than 2.5:1. For purposes
						of calculating the leverage ratio consolidated senior debt only includes secured indebtedness. It also requires the Corporation
						to maintain a ratio of consolidated Covenant EBITDA to consolidated interest expense for the most recent four consecutive
						quarters, of greater than 2.5:1, subject to the amendments noted below. Distributions under the Senior Credit Facility are subject to a pro-forma senior net leverage covenant of less than or equal to
						1.75:1. The Senior Credit Facility also limits the redemption and repurchase of junior debt subject to a pro-forma senior net
						leverage covenant test of less than or equal to 1.75:1.
Precision Drilling Corporation 2022 Annual Report	21					62						Notes to Consolidated Financial Statements

On April 9, 2020, Precision agreed with the lenders of its Senior Credit Facility to certain covenants during the Covenant Relief
Period. On June 18, 2021, Precision agreed with the lenders of its Senior Credit Facility to extend the facility’s maturity date
and extend and amend certain financial covenants during the Covenant Relief Period. The maturity date of the Senior Credit
Facility was extended to June 18, 2025, however, US$53 million of the US$500 million will expire on November 21, 2023.
Precision exited the Covenant Relief Period on September 30, 2022. Under the Senior Credit Facility, amounts can be drawn in U.S. dollars and/or Canadian dollars. At December 31, 2022, US$44
million was drawn under this facility (2021 – US$118 million). Up to US$200 million of the Senior Credit Facility is available for
letters of credit denominated in U.S and/or Canadian dollars and other currencies acceptable to the fronting lender. As at
December 31, 2022 outstanding letters of credit amounted to US$56 million (2021 – US$33 million). The interest rate on loans that are denominated in U.S. dollars is, at the option of Precision, either a margin over a U.S. base
rate or a margin over LIBOR. The interest rate on loans denominated in Canadian dollars is, at the option of Precision, either a
margin over the Canadian prime rate or a margin over the Canadian Dollar Offered Rate (		CDOR); such margins wil be based
on the then applicable ratio of consolidated total debt to EBITDA. (b) Real Estate Credit FacilityIn November 2020, Precision established a Real Estate Term Credit Facility. The facility matures in November 2025 and is
secured by real property located in Houston, Texas. Principal plus interest payments are due monthly, based on 15-year straight-
line amortization with any unpaid principal and accrued interest due at maturity. Interest is calculated using a LIBOR rate plus
margin. In March 2021, Precision established a Canadian Real Estate Credit Facility. The facility matures in March 2026 and is secured
by real properties in Alberta, Canada. Principal plus interest payments are due quarterly, based on 15-year straight-line
amortization with any unpaid principal and accrued interest due at maturity. Interest is calculated using a CDOR rate plus margin. The Real Estate Credit Facilities contain certain affirmative and negative covenants and events of default, customary for these
types of transactions. Under the terms of these facilities, Precision must maintain financial covenants in accordance with the
Senior Credit Facility, described above, as of the last day of each period of four consecutive fiscal quarters. For the Canadian
Real Estate Credit Facility, in the event the Senior Credit Facility expires, is cancelled or is terminated, financial covenants in
effect at that time shall remain in place for the remaining duration of the facility. For the U.S. Real Estate Credit Facility, in the
event the consolidated Covenant EBITDA to consolidated interest expense coverage ratio is waived or removed from the Senior
Credit Facility, a minimum threshold of 1.15:1 is required. (c) Unsecured Senior Notes:Precision has the following unsecured senior notes outstanding:
7.125% US$ senior notes due 2026 These unsecured senior notes bear interest at a fixed rate of 7.125% per annum and mature on January 15, 2026. Interest
is payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2018. Precision may redeem these notes in whole or in part at any time on or after November 15, 2020 and before November
15, 2022, at redemption prices ranging between 105.344% and 101.781% of their principal amount plus accrued interest.
Any time on or after November 15, 2023, these notes can be redeemed for their principal amount plus accrued interest.
Upon specified change of control events, each holder of a note will have the right to sell to Precision all or a portion of its
notes at a purchase price in cash equal to 101% of the principal amount, plus accrued interest to the date of purchase. 6.875% US$ senior notes due 2029 These unsecured senior notes bear interest at a fixed rate of 6.875% per annum and mature on January 15, 2029. Interest
is payable semi-annually on January 15 and July 15 of each year, commencing January 15, 2022. These unsecured senior
notes were issued at a price equal to 99.253% of the face value, resulting in a US$3 million original issue discount. The
original issue discount will be amortized over the life of the notes using the effective interest rate method. Prior to June 15, 2024, Precision may redeem up to 35% of the 6.875% unsecured senior notes due in 2029 with the net
proceeds of certain equity offerings at a redemption price equal to 106.875% of the principal amount plus accrued interest.
Prior to January 15, 2025, Precision may redeem these notes in whole or in part at 100% of their principal amount, plus
accrued interest and the greater of 1.0% of the principal amount of the note to be redeemed and the excess, if any, of the
present value of the January 15, 2025 redemption price plus required interest payments through January 15, 2025
(calculated using the U.S. Treasury rate plus 50 basis points) over the principal amount of the note. As well, Precision
may redeem these notes in whole or in part at any time on or after January 15, 2025 and before January 15, 2027, at
redemption prices ranging between 103.438% and 101.719% of their principal amount plus accrued interest. Any time on
or after January 15, 2027, these notes can be redeemed for their principal amount plus accrued interest. Upon specified
change of control events, each holder of a note will have the right to sell to Precision all or a portion of its notes at a
purchase price in cash equal to 101% of the principal amount, plus accrued interest to the date of purchase.
The unsecured senior notes require Precision to comply with certain restrictive and financial covenants including an incurrence
based test of Consolidated Interest Coverage Ratio, as defined in the senior note agreements, of greater than or equal to 2.0:1
22	Notes to Consolidated Financial Statements		Precision Dril ing Corporation 2022 Annual Report	63

		for the most recent four consecutive fiscal quarters. In the event the Consolidated Interest Coverage Ratio is less than 2.0:1 for
		the most recent four consecutive fiscal quarters the senior notes restrict Precision’s ability to incur additional indebtedness. The unsecured senior notes also contain a restricted payments covenant that limits Precision’s ability to make payments in the
		nature of dividends, distributions and for repurchases from shareholders. These restricted payments baskets grow by, among
		other things, 50% of cumulative consolidated net earnings, and decrease by 100% of cumulative consolidated net losses as
		defined in the note agreements, and cumulative payments made to shareholders. At December 31, 2022, the governing net
		restricted payments basket was negative $363 million (2021 – negative $369 million), therefore limiting us from making any
		further dividend payments or share repurchases until the governing restricted payments basket once again becomes positive.
		During 2022, pursuant to the indentures governing the unsecured senior notes, Precision used the available general restricted
		payments basket to facilitate the repurchase and cancellation of its common shares. Precision’s unsecured senior notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis
		by all U.S. and Canadian subsidiaries that guaranteed the Senior Credit Facility (	Guarantor Subsidiaries). These Guarantor
		Subsidiaries are directly or indirectly 100% owned by the parent company. Separate financial statements for each of the
		Guarantor Subsidiaries have not been provided; instead, the Corporation has included in Note 27 summarized financial
		information and expanded qualitative non-financial disclosures based on Rule 3-10 of the U.S. Securities and Exchange
		Commission’s Regulation S-X. (d) Covenants:At December 31, 2022, Precision was in compliance with the covenants of the Senior Credit Facility, Real Estate Credit Facilities
		and unsecured senior notes.
			Covenant	At December 31, 2022
		Senior Credit Facility
		Consolidated senior debt to consolidated covenant EBITDA(1)			≤	2.50	0.22
		Consolidated covenant EBITDA to consolidated interest expense			≥	2.50	4.80
		Real Estate Credit Facility
		Consolidated covenant EBITDA to consolidated interest expense			≥	2.50	4.80
		Unsecured Senior Notes
		Consolidated interest coverage ratio			≥	2.00	3.62
		(1) For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness.
		NOTE 10.				WAGE SUBSIDIES
		In response to the economic slowdown caused by COVID-19, governments enacted various employer assistance programs
		including the Government of Canada’s Canadian Emergency Wage Subsidy program. For the year ended December 31, 2021,
		Precision recognized $24 mil ion of salary and wage subsidies. Wage subsidies were presented as reductions of operating and
		general and administrative expense of $21 million and $3 million, respectively. No wage subsidies were recognized for the year
		ended December 31, 2022.
		NOTE 11. FINANCE CHARGES
				2022	2021
		Interest:
		Long-term debt	$				81,060 $	78,921
		Lease obligations					2,934	2,764
		Other		968	80
		Income		(323 )	(210)
		Amortization of debt issue costs					3,174	9,876
		Finance charges	$				87,813 $	91,431
		NOTE 12. LEASES (a) As a lesseePrecision recognizes right-of-use assets primarily from its leases of real estate and vehicles and equipment.
Precision Drilling Corporation 2022 Annual Report	23	64						Notes to Consolidated Financial Statements

			Real Estate	Vehicles and		Total
				Equipment
Balance, December 31, 2020		$	43,689	$			11,479 $	55,168
Additions								514	3,029	3,543
Derecognition								—	(480 )	(480)
Depreciation			(3,566)				(3,009 )	(6,575)
Effect of foreign currency exchange differences								(174)	(42 )	(216)
Balance, December 31, 2021		$	40,463	$			10,977 $	51,440
Additions								1,662	5,410	7,072
Acquired								6,990	—		6,990
Depreciation			(3,730)				(3,535 )	(7,265)
Lease remeasurements								(372)	189	(183)
Effect of foreign currency exchange differences								1,483	495	1,978
Balance, December 31, 2022		$	46,496	$			13,536 $	60,032
							Precision’s real estate lease contracts often contain renewal options which may impact the determination of the lease term for
purposes of calculating the lease obligation. If it is reasonably certain that a renewal option will be exercised, the renewal period
is included in the lease term. When entering a lease, Precision assesses whether it is reasonably certain renewal options will be
exercised. Reasonable certainty is established if al relevant facts and circumstances indicate an economic incentive to exercise
the renewal option. For the majority of its real estate leases, Precision is reasonably certain it will exercise its renewal option.
Accordingly, the renewal period has been included in the lease term used to calculate the lease obligation. For the period ended December 31, 2022, Precision had total cash outflows of $10 million (2021 – $9 million) in relation to its
lease obligations. The Corporation has commitments under various lease agreements, primarily for real estate and vehicles and equipment. Terms
of Precision’s real estate leases run for a period of one to 10 years while vehicle and equipment leases are typically for terms of
between three and four years. Expected non-cancellable undiscounted operating lease payments are as follows:

										2022
						2021
Less than one year								$	10,985 $		10,782
One to five years				28,977		29,327
More than five years				8,628		2,391
								$	48,590 $		42,500
							(b) As a lessor Precision leases its rig equipment under long-term drilling contracts with terms ranging from one to five years. At December 31,
2022, the net book value of the underlying rig equipment subject to long-term dril ing contracts was $774 mil ion (2021 – $503
million). The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received
subsequent to December 31, 2022									.


Less than one year					$	481,848
One to five years						746,480
More than five years						37,642
					$	1,265,970

NOTE 13. SHARE-BASED COMPENSATION PLANS Precision’s omnibus equity incentive plan (
									Omnibus Plan) allows the Corporation to settle short-term incentive awards (annual
bonus) and long-term incentive awards (share options, performance share units and restricted share units) issued on or after
February 8, 2017 in voting shares of Precision (either issued from treasury or purchased in the open market), cash, or a
combination of both. Precision intends to settle all short-term incentive, restricted share unit and performance share unit awards
issued under the Omnibus Plan in cash and to settle options in voting shares.


24	Notes to Consolidated Financial Statements									Precision Dril ing Corporation 2022 Annual Report	65

		Liability Classified Plans
					Non-
				Executive		Management
RestrictedPerformance	Performance	Directors’
Share UnitsShare Units	Share Units	DSUs	Total
		Balance, December 31, 2020	$							6,624 $	4,751 $	6,833 $	1,609 $	19,817
		Expensed during the period					17,168	18,634	17,646	3,065	56,513
		Reclassification from equity-settled plans	—					—	(3,164 )	—	(3,164)
		Payments					(5,742)	(1,861)	(4,808 )	—		(12,411)
		Balance, December 31, 2021					18,050	21,524	16,507	4,674	60,755
		Expensed during the period					34,555	87,297	4,172	7,623	133,647
		Settlement in shares	—					—	(14,083 )	—	(14,083)
		Reclassification from equity-settled plans	—					—	(406 )	—	(406)
		Payments					(14,372)	(7,960)	(6,190 )	—		(28,522)
		Foreign exchange	(43)					(3)	—		—	(46)
		Balance, December 31, 2022	$							38,190 $	100,858 $			—	$	12,297 $	151,345
		Current					26,330	64,882	—		—	91,212
		Long-term					11,860	35,976	—		12,297	60,133
		Balance, December 31, 2022	$							38,190 $	100,858 $			—	$	12,297 $	151,345
		(a) Restricted Share Units and Performance Share UnitsPrecision has various cash-settled share-based incentive plans for officers and other eligible employees. Under the Restricted
		Share Unit (							RSU) incentive plan, shares granted to eligible employees vest annually over a three-year term. Vested shares are
		automatically paid out in cash at a value determined by the fair market value of the shares at the vesting date. Under the
		Performance Share Unit (								PSU) incentive plan, shares granted to eligible employees vest at the end of a three-year term. Vested
		shares are automatically paid out in cash in the first quarter fol owing the vested term at a value determined by the fair market
		value of the shares at the vesting date and based on the number of performance shares held multiplied by a performance factor
		that ranges from zero to two times. The performance factor is based on Precision’s share price performance compared to a peer
		group over the three-year period, repayment of debt and leverage ratio. A summary of the RSUs and PSUs outstanding under these share-based incentive plans is presented below:
						RSUs	PSUs
				Outstanding	Outstanding
		December 31, 2020				484,782	565,379
		Granted				356,928	488,510
		Redeemed				(216,820 )	(40,515)
		Forfeited				(26,734 )	(29,640)
		December 31, 2021				598,156	983,734
		Granted				180,710	311,579
		Redeemed				(266,876 )	(143,659)
		Forfeited				(16,822 )	(14,983)
		December 31, 2022				495,168	1,136,671
		Subsequent to December 31, 2022, Precision elected to settle certain vesting RSUs and PSUs through the issuance of
		230,336 common shares. (b) Executive Performance Share UnitsPrecision grants Executive PSUs to certain senior executives. Executive PSUs vest over a three-year period and incorporate
		performance criteria established at the date of grant that can adjust the number of performance share units available for
		settlement from zero to two times the amount originally granted. A summary of the activity under this share-based incentive plan is presented below:
		Executive Performance Share Units	Outstanding
		December 31, 2020	288,707
		Redeemed	(96,355)
		Forfeited	(2,388)
		December 31, 2021	189,964
		Redeemed	(189,964)
		December 31, 2022	—
Precision Drilling Corporation 2022 Annual Report	25	66							Notes to Consolidated Financial Statements

Included in net loss for the year ended December 31, 2022 was an expense of $4 million (2021 – $18 million). During 2022,

Precision settled 189,964 vesting Executive PSUs in 263,900 common shares. (c) Non-Management Directors Precision has a deferred share unit (

DSU) plan for non-management directors whereby fully vested DSUs are granted quarterly

based on an election by the non-management director to receive all or a portion of his or her compensation in DSUs. These

DSUs are redeemable in cash or for an equal number of common shares upon the director’s retirement. The redemption of

DSUs in cash or common shares is solely at Precision’s discretion. Non-management directors can receive a lump sum payment

or two separate payments any time up until December 15 of the year fol owing retirement. If the non-management director does

not specify a redemption date, the DSUs will be redeemed on a single date six months after retirement. The cash settlement

amount is based on the weighted average trading price for Precision’s shares on the Toronto Stock Exchange for the five days

immediately prior to payout. A summary of the DSUs outstanding under this share-based incentive plan is presented below:

Deferred Share Units

Outstanding

Balance December 31, 2020

77,574

Granted

27,017

Balance December 31, 2021

104,591

Granted

14,183

Balance December 31, 2022

118,774

Equity Settled Plans (d) Option Plan

Under this plan, the exercise price of each option equals the fair market value of the option at the date of grant determined by

the weighted average trading price for the five days preceding the grant. The options are denominated in either Canadian or

U.S. dollars, and vest over a period of three years from the date of grant, as employees render continuous service to the

Corporation, and have a term of seven years.

A summary of the status of the equity incentive plan is presented below:

Weighted

Options

Range of

Average

Options

Canadian Share Options

Outstanding

Exercise Prices

Exercise Price

Exercisable

December 31, 2020

148,665

$ 87.00 – 286.20

138.86

141,156

Forfeited

(33,060)

89.20 – 286.20

193.10

December 31, 2021

115,605

87.00 – 146.40

123.35

115,605

Exercised

(26,705)

87.00 – 89.20

88.62

Forfeited

(65,845)

89.20 – 286.20

141.05

December 31, 2022

23,055

$ 87.00 – 145.97 $

113.01

23,055

Weighted

Range of

Average

Options

Exercise Prices

Exercise Price

Options

U.S. Share Options

Outstanding

(US$)

Exercisable

December 31, 2020

283,793 $ 51.20 – 183.60 $

86.23

239,521

Forfeited

(15,950)

183.60 – 183.60

183.60

December 31, 2021

267,843 $ 51.20 – 115.80

80.43

257,854

Exercised

(93,890) 51.20 – 68.80

61.64

Forfeited

(32,205)

115.80 – 115.80

115.80

December 31, 2022

141,748 $ 51.20 – 111.47 $

84.84

141,748

Canadian Share Options

Total Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Remaining

Weighted

Average

Contractual Life

Average

Range of Exercise Prices:

Number

Exercise Price

(Years)

Number

Exercise Price

$ 87.00

12,885

87.00

2.15

12,885 $

87.00

145.97

10,170

145.97

1.13

10,170

145.97

$ 87.00 – 145.97

23,055 $

113.01

1.70

23,055 $

113.01

Notes to Consolidated Financial Statements

Precision Dril ing Corporation 2022 Annual Report

		U.S. Share Options	Total Options Outstanding			Options Exercisable
						Weighted
					Weighted	Average	Weighted
					Average	Remaining	Average
					Exercise Price	Contractual Life	Exercise Price
		Range of Exercise Prices (US$):		Number	(US$)	(Years)	Number	(US$)
		$ 51.20 – 85.40	83,993 $					66.99	2.03	83,993 $	66.99
		100.40 – 111.47	57,755					110.81	1.08	57,755	110.81
		$ 51.20 – 111.47		141,748 $	84.84	1.64	141,748 $	84.84
		No options were granted during 2021 and 2022. (e) Non-Management DirectorsPrior to January 1, 2012, Precision had a deferred share unit plan for non-management directors. Under the plan, fully vested
		deferred share units were granted quarterly based on an election by the non-management director to receive all or a portion of
		his or her compensation in deferred share units. These deferred share units are redeemable into an equal number of common
		shares any time after the director’s retirement. As at December 31, 2022, there were 1,470 (2021 – 1,470) deferred share units outstanding.
		NOTE 14. INCOME TAXESThe provision for income taxes differs from that which would be expected by applying statutory Canadian income tax rates. A reconciliation of the difference for the years ended December 31, is as follows:
			2022	2021
		Loss before income taxes				$	(14,143 ) $	(182,782)
		Federal and provincial statutory rates	24 %	24%
		Tax at statutory rates				$	(3,394 ) $	(43,868)
		Adjusted for the effect of:
		Non-deductible expenses	1,146	1,162
		Non-taxable capital gains	(379 )	(257)
		Impact of foreign tax rates	(2,559 )	(1,474)
		Withholding taxes	1,026	937
		Taxes related to prior years	1,718	(1,467)
		Tax assets not recognized					22,592	37,924
		Other	—		1,647
		Income tax expense (recovery)				$	20,150 $	(5,396)
		The net deferred tax liability is comprised of the tax effect of the following temporary differences:
			2022	2021
		Deferred tax liability:
		Property, plant and equipment and intangibles				$	364,278 $	359,383
		Debt issue costs	1,303	1,457
		Partnership deferrals	21,768	11,082
		Other	6,284	6,221
							393,633	378,143
		Offsetting of assets and liabilities					(364,687 )	(365,924)
						$	28,946 $	12,219
		Deferred tax assets:
		Losses (expire from time to time up to 2042)				$	318,967 $	340,406
		Long-term incentive plan	36,542	14,264
		Other	9,633	12,121
							365,142	366,791
		Offsetting of assets and liabilities					(364,687 )	(365,924)
						$	455 $	867
		The Corporation has loss carry forwards in the U.S. and certain international locations and capital loss carry forwards in Canada
		and other deductible temporary differences in certain international locations for which it is unlikely that sufficient future taxable
		income will be available. Accordingly, the Corporation has not recognized a deferred tax asset for the following items:
Precision Drilling Corporation 2022 Annual Report	27	68						Notes to Consolidated Financial Statements

		2022	2021
Tax losses (Capital)				$	29,255 $	29,363
Tax losses (Income)		134,588	96,671
Deductible temporary differences		5,224	4,153
Total				$	169,067 $	130,187
The movement in temporary differences is as follows:
					Property,
					Plant and		Other		Other	Net
					Equipment		Deferred	Long-Term							Deferred	Deferred
					and	Partnership	Tax	Debt Issue	Incentive							Tax	Tax
					Intangibles	Deferrals	Liabilities	Losses	Costs	Plan							Assets	Liability
Balance, December 31, 2020					$ 393,631 $	2,532 $	6,322 $ (370,439) $	2,665 $	(4,956 ) $							(9,617) $	20,138
Recognized in net earnings (loss)					(32,562 )	8,550	(99)	28,528	(1,208)	(9,291 )							(2,517)	(8,599)
Foreign exchange					(1,686 )					—	(2)	1,505	—	(17 )					13	(187)
Balance, December 31, 2021					$ 359,383 $	11,082 $	6,221 $ (340,406) $	1,457 $	(14,264 ) $							(12,121) $	11,352
Recognized in net earnings (loss)					(10,047 )	10,686	51	33,827	(154)	(21,583 )							3,008	15,788
Foreign exchange					14,942					—		12	(12,388)	—						(695 )	(520)	1,351
Balance, December 31, 2022					$ 364,278 $	21,768 $	6,284 $	(318,967) $	1,303 $	(36,542 ) $							(9,633) $	28,491
NOTE 15. BANK INDEBTEDNESS At December 31, 2022, Precision had available $40 million (2021 – $40 million) and US$15 million (2021 – US$15 million) under
secured operating facilities, and a secured US$40 million (2021 – US$30 million) facility for the issuance of letters of credit and
performance and bid bonds to support international operations. In 2022, Precision increased the capacity of our secured demand
letter of credit facility from US$30 million to US$40 million to allow for the issuance of additional letters of credit after securing
certain international drilling contracts. As at December 31, 2022 and 2021, no amounts had been drawn on any of the facilities.
Availability of the $40 million and US$40 million facilities was reduced by outstanding letters of credit in the amount of $28 million
(2021 – $7 million) and US$31 million (2021 – US$3 million), respectively. The facilities are primarily secured by charges on
substantially all present and future property of Precision and its material subsidiaries. Advances under the $40 million facility are
available at the bank’s prime lending rate, U.S. base rate, U.S. LIBOR rate plus applicable margin, or applicable margin for
Banker’s Acceptances, or in combination, and under the US$15 million facility at the bank’s prime lending rate.
NOTE 16. PROVISIONS AND OTHER
			Workers’
									Compensation
Balance December 31, 2020		$	8,308
Expensed during the year			3,296
Payment of deductibles and uninsured claims			(2,815)
Foreign exchange			(71)
Balance December 31, 2021			8,718
Expensed during the year			7,615
Payment of deductibles and uninsured claims			(5,229)
Foreign exchange			643
Balance December 31, 2022		$	11,747
		2022	2021
Current				$	4,209							$	2,205
Long-term		7,538	6,513
				$	11,747							$	8,718
Precision maintains a provision for the deductible and uninsured portions of workers’ compensation and general liability
claims. The amount accrued for the provision for losses incurred varies depending on the number and nature of the claims
outstanding at the statement of financial position dates. In addition, the accrual includes management’s estimate of the future
cost to settle each claim such as future changes in the severity of the claim and increases in medical costs. Precision uses third
parties to assist in developing the estimate of the ultimate costs to settle each claim, which is based on historical experience
associated with the type of each claim and specific information related to each claim. The specific circumstances of each claim
may change over time prior to settlement and, as a result, the estimates made as of the reporting dates may change. The current
portion of the provision is presented within accounts payables and accrued liabilities.
28	Notes to Consolidated Financial Statements						Precision Dril ing Corporation 2022 Annual Report	69

		NOTE 17. SHAREHOLDERS’ CAPITAL (a) Authorized – unlimited number of voting common shares
			– unlimited number of preferred shares, issuable in series, limited to an amount equal to one half of the
			issued and outstanding common shares
		(b) Issued
		Common shares		Number	Amount
		Balance, December 31, 2020		13,459,593	$	2,285,738
		Share repurchase		(155,168 )	(4,294)
		Balance, December 31, 2021		13,304,425	$	2,281,444
		Share repurchase		(130,395 )	(10,010)
		Settlement of Executive PSUs		263,900	14,083
		Share options exercised		120,595	14,016
		Balance, December 31, 2022		13,558,525	$	2,299,533
		(c) Normal Course Issuer BidIn 2022, the Toronto Stock Exchange (
						TSX) approved Precision’s application to renew its Normal Course Issuer Bid (NCIB).
		Under the terms of the NCIB, Precision may purchase and cancel up to a maximum of 1,148,771 common shares, representing
		10% of the public float of common shares as of August 15, 2022. Purchases under the NCIB were made through the facilities of
		the TSX, the New York Stock Exchange and various other designated exchanges in accordance with applicable regulatory
		requirements at a price per common share representative of the market price at the time of acquisition. The NCIB will terminate
		no later than August 28, 2023. For the year ended December 31, 2022, Precision repurchased and cancelled a total of 130,395
		(2021 – 155,168) common shares for $10 million (2021 – $4 million). Subsequent to December 31, 2022, Precision repurchased
		and cancelled 15,888 common shares for $1 million.
		NOTE 18. PER SHARE AMOUNTSThe following tables reconcile the net loss and weighted average shares outstanding used in computing basic and diluted loss
		per share:
				2022	2021
		Net loss – basic and diluted						$	(34,293 ) $	(177,386)
		(Stated in thousands)		2022	2021
		Weighted average shares outstanding – basic and diluted		13,546	13,315
		NOTE 19. ACCUMULATED OTHER COMPREHENSIVE INCOME
							Unrealized	Tax Benefit						Accumulated
						Foreign Currency	Foreign Exchange								Related to Net	Other
						Translation Gains	Gain (Loss) on Net								Investment Hedge	Comprehensive
							(Losses)	Investment Hedge								of Long-Term Debt	Income
		December 31, 2020				$	483,657	$										(351,474) $	5,398 $	137,581
		Other comprehensive income (loss)					(11,256)				8,455	—		(2,801)
		December 31, 2021					472,401				(343,019)	5,398	134,780
		Other comprehensive income (loss)					106,669				(81,735)	—		24,934
		December 31, 2022				$	579,070	$										(424,754) $	5,398 $	159,714
Precision Drilling Corporation 2022 Annual Report	29	70	Notes to Consolidated Financial Statements

NOTE 20. EMPLOYEE BENEFIT PLANSThe Corporation has a defined contribution pension plan covering a significant number of its employees. Under this plan, the
Corporation matched individual contributions up to 5% (2021 – 3%) of the employee’s eligible compensation. Total expense
under the defined contribution plan in 2022 was $11 million (2021 – $6 million).
NOTE 21. RELATED PARTY TRANSACTIONS
Compensation of Key Management PersonnelThe remuneration of key management personnel is as follows:
		2022	2021
Salaries and other benefits				$	6,132			$	6,591
Equity-settled share-based compensation		441	5,554
Cash-settled share-based compensation		60,796	18,741
				$	67,369			$	30,886
Key management personnel are comprised of the directors and executive officers of the Corporation. Certain executive officers
have entered into employment agreements with Precision that provide termination benefits of up to 24 months base salary plus
up to two times targeted incentive compensation upon dismissal without cause.
NOTE 22. CAPITAL COMMITMENTSAt December 31, 2022, the Corporation had commitments to purchase property, plant and equipment totaling $184 million (2021
– $137 million). Payments of $97 million for these commitments are expected to be made in 2023, $36 million in 2024 and $35
million in 2024.
NOTE 23. FINANCIAL INSTRUMENTSFinancial Risk ManagementThe Board of Directors is responsible for identifying the principal risks of Precision’s business and for ensuring the
implementation of systems to manage these risks. With the assistance of senior management, who report to the Board of
Directors on the risks of Precision’s business, the Board of Directors considers such risks and discusses the management of
such risks on a regular basis.Precision has exposure to the following risks from its use of financial instruments:(a) Credit RiskAccounts receivable includes balances from customers primarily operating in the oil and natural gas industry. The Corporation
manages credit risk by assessing the creditworthiness of its customers before providing services and on an ongoing basis, and
by monitoring the amount and age of balances outstanding. In some instances, the Corporation will take additional measures to
reduce credit risk including obtaining letters of credit and prepayments from customers. When indicators of credit problems
appear, the Corporation takes appropriate steps to reduce its exposure including negotiating with the customer, filing liens and
entering into litigation. For the year ended December 31, 2022, Precision did not have any customers with revenue from
transactions exceeding 10% of consolidated revenue (2021 – one customer exceeded 10% of consolidated revenue). In addition,
Precision’s most significant customer accounted for $24 million of the trade receivables balance at December 31, 2022 (2021 –
$16 million). The movement in the expected credit loss al owance during the year was as follows:
		2022	2021
Balance, January 1,				$	585 $	862
Impairment loss recognized		1,167	29
Amounts written-off as uncollectible		(23 )	(70)
Impairment loss reversed		(31 )	(231)
Effect of movement in exchange rates		34	(5)
Balance, December 31,				$	1,732			$	585
30	Notes to Consolidated Financial Statements					Precision Dril ing Corporation 2022 Annual Report	71

		The ageing of trade receivables at December 31 was as follows:
			2022	2021
			Provision for	Provision for
			Gross		Impairment	Gross	Impairment
		Not past due	$						224,872	$				2 $	117,618 $	1
		Past due 0 – 30 days				54,578	16	27,235	5
		Past due 31 – 120 days				18,845	1,400	8,524	474
		Past due more than 120 days	766				314	105	105
$						299,061	$				1,732 $	153,482 $	585
		(b) Interest Rate RiskInterest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Precision had
		exposure to interest rate fluctuations on amounts drawn on its Senior Credit Facility and Real Estate Credit Facility as they are
		subject to floating rates of interest. At December 31, 2022, Precision had drawn US$44 million on its Senior Credit Facility (2021
		– US$118 million) and $30 million (2021 – $31 million) on its Real Estate Credit Facilities. As at December 31, 2022, a 1%
		change to the interest rate would have a $1 million impact on net loss (2021 – $2 million). The interest rate on Precision’s
		unsecured senior notes is fixed and is not subject to interest rate risk.(c) Foreign Currency RiskThe Corporation is primarily exposed to foreign currency fluctuations in relation to the working capital of its foreign operations
		and certain long-term debt facilities of its Canadian operations. The Corporation has no significant exposures to foreign
		currencies other than the U.S. dollar. The Corporation monitors its foreign currency exposure and attempts to minimize the
		impact by aligning appropriate levels of U.S. denominated debt with cash flows from U.S. based operations.The fol owing financial instruments were denominated in U.S. dol ars:
			2022	2021
						Canadian	Foreign			Canadian	Foreign
						Operations	Operations					Operations	Operations
		Cash	US$			264 US$		13,421 US $	2,398 US$	17,382
		Accounts receivable	215		175,543	14	115,614
		Accounts payable and accrued liabilities				(28,041)	(101,531)			(29,427 )	(81,971)
		Long-term liabilities, excluding long-term incentive plans (1)	—			(14,542)	—		(14,781)
		Net foreign currency exposure	US$						(27,562) US$	72,891 US $			(27,015 ) US$	36,244
		Impact of $0.01 change in the U.S. dollar to Canadian dollar	$			(276)	$				—		$	(270 )	$	—
		exchange rate on net earnings (loss)
		Impact of $0.01 change in the U.S. dollar to Canadian dollar	$			—		$				729	$	—		$	362
		exchange rate on comprehensive loss
		(1) Excludes U.S. dollar long-term debt that has been designated as a hedge of the Corporation’s net investment in certain self-sustaining foreign operations. (d) Liquidity RiskLiquidity risk is the exposure of the Corporation to the risk of not being able to meet its financial obligations as they become due.
		The Corporation manages liquidity risk by monitoring and reviewing actual and forecasted cash flows to ensure there are
		available cash resources to meet these needs. The following are the contractual maturities of the Corporation’s financial liabilities
		and other contractual commitments as at December 31, 2022:
									2023	2024			2025		2026			2027 Thereafter	Total
		Accounts payable and accrued liabilities								$ 392,053 $	—	$	—	$				—	$	—	$	—	$ 392,053
		Share-based compensation							94,403	62,189			31,245				—		—		—		187,837
		Long-term debt							2,287	2,287			71,367		484,893			—		542,004	1,102,838
		Interest on long-term debt (1)							77,774	77,774			77,313		54,401		37,263	38,816	363,341
		Commitments							108,101	45,541			42,872		22,592		4,835	8,628	232,569
		Total								$ 674,618	$ 187,791						$ 222,797	$ 561,886				$ 42,098 $ 589,448	$2,278,638
		Fair ValuesThe carrying value of cash, accounts receivable, and accounts payable and accrued liabilities approximates their fair value due
		(1) Excludes amortization of long-term debt issue costs.
		to the relatively short period to maturity of the instruments. Amounts drawn on the Senior Credit Facility and Real Estate Credit
		Facilities, measured at amortized cost, approximate fair value as this indebtedness is subject to floating rates of interest. The
		fair value of the unsecured senior notes at December 31, 2022 was approximately $965 million (2021 – $969 million).
Precision Drilling Corporation 2022 Annual Report	31	72									Notes to Consolidated Financial Statements

Financial assets and liabilities recorded or disclosed at fair value in the consolidated statements of financial position are
categorized based on the level of judgement associated with the inputs used to measure their fair value. Hierarchical levels are
based on the amount of subjectivity associated with the inputs in the fair determination and are as follows:
Level I – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.Level II – Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or
liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated
life.Level III – Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability
at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the
inputs to the model.
The estimated fair value of Unsecured Senior Notes is based on level II inputs. The fair value is estimated considering the risk
free interest rates on government debt instruments of similar maturities, adjusted for estimated credit risk, industry risk and
market risk premiums.
NOTE 24. CAPITAL MANAGEMENTThe Corporation’s strategy is to carry a capital base to maintain investor, creditor and market confidence and to sustain the
future development of the business. The Corporation seeks to maintain a balance between the level of long-term debt and
shareholders’ equity to ensure access to capital markets to fund growth and working capital given the cyclical nature of the
oilfield services sector. The Corporation strives to maintain a conservative ratio of long-term debt to long-term debt plus equity. As at December 31, 2022 and 2021, these ratios were as follows:
		2022	2021
Long-term debt				$	1,085,970 $	1,106,794
Shareholders’ equity		1,230,529	1,225,555
Total capitalization				$	2,316,499 $	2,332,349
Long-term debt to long-term debt plus equity ratio		0.47	0.47
As at December 31, 2022, liquidity remained sufficient as Precision had $22 mil ion (2021 – $41 mil ion) in cash and access to
the US$500 million Senior Credit Facility (2021 – US$500 million) and $115 million (2021 – $97 million) secured operating
facilities. As at December 31, 2022, US$44 million (2021 – US$118 million) was drawn on the Senior Credit Facility with available
credit further reduced by US$56 million (2021 – US$33 million) in outstanding letters of credit. Availability of the $40 million
secured operating facility and US$40 million secured facility for the issuance of letters of credit and performance and bid bonds
were reduced by outstanding letters of credit of $28 million (2021 – $7 million) and US$31 million (2021 – US$3 million),
respectively. There were no amounts drawn on the US$15 million (2021 – nil) secured operating facility.
NOTE 25. SUPPLEMENTAL INFORMATIONComponents of changes in non-cash working capital balances were as follows:
		2022	2021
Accounts receivable				$	(143,832 ) $	(50,255)
Inventory		(10,482 )	1,993
Accounts payable and accrued liabilities		121,878	44,986
				$	(32,436 ) $	(3,276)
Pertaining to:
Operations				$	(45,890 ) $	(13,018)
Investments		13,454	9,742
The components of accounts receivable were as follows:
		2022	2021
Trade				$	297,329 $	152,897
Accrued trade		25,446	26,731
Prepaids and other		91,150	76,112
				$	413,925 $	255,740
32	Notes to Consolidated Financial Statements				Precision Dril ing Corporation 2022 Annual Report	73

		The components of accounts payable and accrued liabilities were as follows:
			2022	2021
		Accounts payable		$	136,360 $	90,750
		Accrued liabilities:
		Payrol	153,932	68,953
		Other	101,761	64,420
				$	392,053 $	224,123
		Precision presents expenses in the consolidated statements of loss by function with the exception of depreciation and
		amortization and gain on asset disposals, which are presented by nature. Operating expense and general and administrative
		expense would include $241 million (2021 – $263 million) and $8 mil ion (2021 – $11 million), respectively, of depreciation and
		amortization and gain on asset disposals, if the statements of loss were presented purely by function. The following table
		presents operating and general and administrative expenses by nature:
			2022	2021
		Wages, salaries and benefits		$	735,566		$	482,695
		Wage subsidies	—		(24,108)
		Purchased materials, supplies and services	436,356	278,743
		Share-based compensation	133,667	56,745
				$	1,305,589		$	794,075
		Allocated to:
		Operating expense		$	1,124,601		$	698,144
		General and administrative	180,988	95,931
				$	1,305,589		$	794,075
		NOTE 26. CONTINGENCIES AND GUARANTEESThe business and operations of the Corporation are complex and the Corporation has executed a number of significant
		financings, business combinations, acquisitions and dispositions over the course of its history. The computation of income taxes
		payable as a result of these transactions involves many complex factors as wel as the Corporation’s interpretation of relevant
		tax legislation and regulations. The Corporation’s management believes that the provision for income tax is adequate and in
		accordance with IFRS and applicable legislation and regulations. However, there are tax filing positions that have been and can
		still be the subject of review by taxation authorities who may successfully challenge the Corporation’s interpretation of the
		applicable tax legislation and regulations, with the result that additional taxes could be payable by the Corporation.The Corporation, through the performance of its services, product sales and business arrangements, is sometimes named as a
		defendant in litigation. The outcome of such claims against the Corporation is not determinable at this time; however, their
		ultimate resolution is not expected to have a material adverse effect on the Corporation.The Corporation has entered into agreements indemnifying certain parties primarily with respect to tax and specific third-party
		claims associated with businesses sold by the Corporation. Due to the nature of the indemnifications, the maximum exposure
		under these agreements cannot be estimated. No amounts have been recorded for the indemnities as the Corporation’s
		obligations under them are not probable or determinable.
		NOTE 27. LONG-TERM DEBT GUARANTORS Precision Drilling Corporation (
						Parent) issued registered unsecured senior notes in 2017 and 2021 which are ful y and
		unconditionally guaranteed by certain U.S. and Canadian subsidiaries (					Guarantor Subsidiaries) that also guaranteed the
		Senior Credit Facility. These Guarantor Subsidiaries are directly or indirectly wholly owned by the Parent. The following is a
		description of the terms and conditions of the guarantees with respect to the unsecured senior notes for which Precision is the
		Parent issuer and Guarantor Subsidiaries (						Obligor Group) and provides a full and unconditional guarantee.
		As at December 31, 2022, Precision had $1,013 million principal amount of unsecured senior notes outstanding, $471 million
		due in 2026 and $542 million due in 2029, all of which is guaranteed by the Guarantor Subsidiaries. The Guarantor Subsidiaries jointly and severally, fully, unconditionally, and irrevocably guarantees the payment of the principal
		and interest on the unsecured senior notes when they become due, whether at maturity or otherwise. The guarantee is
		unsecured and ranks senior with all of the Guarantor Subsidiaries’ other unsecured obligations. The Guarantor Subsidiaries will be released and relieved of their obligations under the guarantees after the obligations to the
		holders are satisfied in accordance with the applicable indentures.
Precision Drilling Corporation 2022 Annual Report	33	74							Notes to Consolidated Financial Statements

Summarized Financial Information The following tables include summarized financial information for the Obligor Group on a combined basis after the elimination
of (i) intercompany transactions and balances within the Obligor Group; (ii) equity in earnings from investments in the non-
guarantor subsidiaries; and (iii) intercompany dividend income. Statements of Loss
		Parent and Guarantor Subsidiaries
			2022	2021
Revenue		$	1,474,824			$	844,619
Expenses		1,196,168		690,149
Earnings before income taxes, loss on redemption and repurchase of			278,656	154,470
unsecured senior notes, loss (gain) on investments and other assets, finance
charges, foreign exchange, gain on asset disposals, and depreciation and
amortization
Net loss			(25,780 )	(171,030)
Statements of Financial Position
		Parent and Guarantor Subsidiaries
			2022	2021
Assets
Current assets		$	378,740		$	219,013
Property, plant and equipment		1,959,329		1,909,951
Other non-current assets			97,691	79,033
		Parent and Guarantor Subsidiaries
			2022	2021
Liabilities
Current liabilities		$	365,025		$	200,784
Long-term debt		1,085,970		1,106,794
Other non-current liabilities			144,477	87,411
Excluded from the statements of loss and statements of financial position above are the following intercompany transactions
and balances that the Obligor Group had with the non-guarantor subsidiaries:
		Parent and Guarantor Subsidiaries
			2022	2021
Assets
Accounts receivable, intercompany		$	52,649		$	34,373
Short-term advances to affiliates			11,753	11,686
		Parent and Guarantor Subsidiaries
			2022	2021
Liabilities
Accounts payable and accrued liabilities, intercompany		$	41,202		$	33,820
Long-term advances from affiliates			183,330	128,606
NOTE 28. SUBSIDIARIESSignificant Subsidiaries
			Ownership Interest
						Country of
						Incorporation	2022	2021
Precision Limited Partnership						Canada	100 %	100%
Precision Drilling Canada Limited Partnership						Canada	100 %	100%
Precision Diversified Oilfield Services Corp.						Canada	100 %	100%
Precision Drilling (US) Corporation						United States	100 %	100%
Precision Drilling Holdings Company						United States	100 %	100%
Precision Drilling Company LP						United States	100 %	100%
Precision Completion & Production Services Ltd.						United States	100 %	100%
Grey Wolf Drilling Limited						Barbados	100 %	100%
Grey Wolf Drilling (Barbados) Ltd.						Barbados	100 %	100%
34	Notes to Consolidated Financial Statements						Precision Dril ing Corporation 2022 Annual Report	75