Enhanced Investments - Financial Portal

Published: 2022-10-28

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

	(Stated in thousands of Canadian dol ars)	September 30, 2022 December 31, 2021
	ASSETS
	Current assets:
	Cash	$		40,048 $	40,588
	Accounts receivable		419,217	255,740
	Inventory		30,319	23,429
	Total current assets		489,584	319,757
	Non-current assets:
	Income tax recoverable		1,633	—
	Deferred tax assets	786	867
	Right-of-use assets		59,517	51,440
	Property, plant and equipment		2,343,526	2,258,391
	Intangibles		20,609	23,915
	Investments and other assets		11,729	7,382
	Total non-current assets		2,437,800	2,341,995
	Total assets	$		2,927,384 $	2,661,752

	LIABILITIES AND EQUITY
	Current liabilities:
	Accounts payable and accrued liabilities	$		320,349 $	224,123
	Income taxes payable		1,407	839
	Current portion of lease obligations		13,233	10,935
	Current portion of long-term debt (Note 5)		2,306	2,223
	Total current liabilities		337,295	238,120

	Non-current liabilities:
	Share-based compensation (Note 7)		34,886	26,728
	Provisions and other		7,410	6,513
	Lease obligations		52,359	45,823
	Long-term debt (Note 5)		1,241,099	1,106,794
	Deferred tax liabilities		21,539	12,219
	Total non-current liabilities		1,357,293	1,198,077
	Shareholders’ equity:
	Shareholders’ capital (Note 8)		2,294,360	2,281,444
	Contributed surplus		74,057	76,311
	Deficit		(1,304,756 )	(1,266,980 )
	Accumulated other comprehensive income		169,135	134,780
	Total shareholders’ equity		1,232,796	1,225,555
	Total liabilities and shareholders’ equity	$		2,927,384 $	2,661,752

	See accompanying notes to condensed interim consolidated financial statements.
16

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) (UNAUDITED)

		Three Months Ended September 30, Nine Months Ended September 30,
	(Stated in thousands of Canadian dol ars, except per share amounts)		2022	2021	2022	2021


	Revenue (Note 3)		$	429,335 $	253,813		$ 1,106,690 $	691,645
	Expenses:
	Operating			284,868	184,422			784,394		485,998
	General and administrative			24,906	23,983			101,781		76,756
	Earnings before income taxes, gain on investments		119,561	45,408			220,515		128,891
	and other assets, loss on repurchase of unsecured
	senior notes, finance charges, foreign exchange, gain
	on asset disposals and depreciation and amortization
	Depreciation and amortization			69,448	69,431			207,662		211,148
	Gain on asset disposals			(8,238 )	(3,261 )			(22,152 )		(6,224 )
	Foreign exchange			1,344	464			1,362	104
	Finance charges (Note 6)			22,521	20,639			64,294		70,783
	Loss on repurchase of unsecured senior notes			—	—			—	9,520
	Gain on investments and other assets			(2,515 )	(327 )			(3,738 )	(327 )
	Earnings (loss) before income taxes			37,001	(41,538 )			(26,913 )		(156,113 )
	Income taxes:
	Current			958	890			2,563	2,462
	Deferred			5,364	(4,396 )			8,300		(8,525 )
				6,322	(3,506 )			10,863		(6,063 )
	Net earnings (loss)		$	30,679 $	(38,032 )		$	(37,776 ) $ (150,050 )
	Net earnings (loss) per share: (Note 9)
	Basic		$	2.26 $	(2.86 )		$	(2.79 ) $		(11.27 )
	Diluted		$	2.03 $	(2.86 )		$	(2.79 ) $		(11.27 )

	See accompanying notes to condensed interim consolidated financial statements.

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
	(UNAUDITED)

		Three Months Ended September 30, Nine Months Ended September 30,
	(Stated in thousands of Canadian dol ars)		2022	2021			2022	2021
	Net earnings (loss)		$	30,679 $	(38,032 )		$	(37,776 ) $ (150,050 )
	Unrealized gain (loss) on translation of assets and		111,811	33,364			139,478		(9,182 )
	liabilities of operations denominated in foreign
	currency
	Foreign exchange gain (loss) on net investment hedge		(84,060 )	(24,544 )			(105,123 )	6,995
	with U.S. denominated debt
	Comprehensive income (loss)		$	58,430 $	(29,212 )		$	(3,421 ) $ (152,237 )

	See accompanying notes to condensed interim consolidated financial statements.
17

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		Three Months Ended September 30, Nine Months Ended September 30,
	(Stated in thousands of Canadian dol ars)		2022	2021		2022	2021
	Cash provided by (used in):
	Operations:
	Net earnings (loss)		$	30,679 $	(38,032 )	$	(37,776 ) $ (150,050 )
	Adjustments for:
	Long-term compensation plans			411	7,887		34,847	28,688
	Depreciation and amortization			69,448	69,431		207,662	211,148
	Gain on asset disposals			(8,238 )	(3,261 )		(22,152 )	(6,224 )
	Foreign exchange			773	415		924	1,437
	Finance charges			22,521	20,639		64,294	70,783
	Income taxes			6,322	(3,506 )		10,863	(6,063 )
	Other			(2 )	2		273	(562 )
	Gain on investments and other assets			(2,515 )	(327 )		(3,738 )	(327 )
	Loss on repurchase of unsecured senior notes			—	—		—	9,520
	Income taxes paid			(220 )	(1,134 )		(3,023 )	(5,200 )
	Income taxes recovered			10	44		10	47
	Interest paid			(38,005 )	(18,804 )		(80,706 )	(63,982 )
	Interest received			143	171		177	347
	Funds provided by operations			81,327	33,525		171,655	89,562
	Changes in non-cash working capital balances			(73,185 )	(11,654 )		(93,633 )	(10,050 )
				8,142	21,871		78,022	79,512
	Investments:
	Purchase of property, plant and equipment			(51,103 )	(19,500 )		(126,941 )	(48,191 )
	Proceeds on sale of property, plant and equipment			22,337	4,476		32,033	10,390
	Business acquisitions (Note 11)			(10,200 )	—		(10,200 )	—
	Purchase of investments and other assets			(73 )	(3,000 )		(609 )	(3,000 )
	Changes in non-cash working capital balances			7,328	500		6,881	3,213
				(31,711 )	(17,524 )		(98,836 )	(37,588 )
	Financing:
	Issuance of long-term debt			50,360	—		144,889	696,341
	Repayments of long-term debt			(34,475 )	(8,209 )		(118,586 )	(769,668 )
	Repurchase of share capital			(5,010 )	—		(10,010 )	(4,294 )
	Issuance of common shares on the exercise of options			—	—		6,162	—
	Debt issuance costs			—	344		—	(9,450 )
	Debt amendment fees			—	(3 )		—	(913 )
	Lease payments			(1,777 )	(1,633 )		(5,186 )	(4,963 )
	Changes in non-cash working capital balances			—	(1,829 )		—	—
				9,098	(11,330 )		17,269	(92,947 )
	Effect of exchange rate changes on cash			2,878	642		3,005	(653 )
	Decrease in cash			(11,593 )	(6,341 )		(540 )	(51,676 )
	Cash, beginning of period			51,641	63,437		40,588	108,772
	Cash, end of period		$	40,048 $	57,096	$	40,048 $	57,096

	See accompanying notes to condensed interim consolidated financial statements.
18

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

					Accumulated
						Other
		Shareholders’		Contributed	Comprehensive	Total
	(Stated in thousands of Canadian dol ars)		Capital	Surplus		Income	Deficit	Equity
	Balance at January 1, 2022	$ 2,281,444 $							76,311 $	134,780 $ (1,266,980 ) $ 1,225,555
	Net loss for the period		—						—	—	(37,776 )	(37,776 )
	Other comprehensive income for the		—						—	34,355	—	34,355
	period
	Share options exercised		8,843						(2,681 )	—	—	6,162
	Share repurchases		(10,010 )						—	—	—	(10,010 )
	Share-based compensation		14,083						(219 )	—	—	13,864
	reclassification
	Share-based compensation expense		—						646	—	—	646
	Balance at September 30, 2022	$ 2,294,360 $							74,057 $	169,135 $ (1,304,756 ) $ 1,232,796

					Accumulated
						Other
		Shareholders’		Contributed	Comprehensive	Total
	(Stated in thousands of Canadian dol ars)		Capital						Surplus	Income	Deficit	Equity
	Balance at January 1, 2021	$ 2,285,738 $							72,915 $	137,581 $ (1,089,594 ) $ 1,406,640
	Net loss for the period			—						—	—	(150,050 )	(150,050 )
	Other comprehensive loss for the			—						—	(2,187 )	—	(2,187 )
	period
	Share repurchases		(4,294 )							—	—	—	(4,294 )
	Share-based compensation			—					(2,349 )	—	—	(2,349 )
	reclassification
	Share-based compensation expense			—					6,187	—	—	6,187
	Balance at September 30, 2021	$ 2,281,444 $							76,753 $	135,394 $ (1,239,644 ) $ 1,253,947

	See accompanying notes to condensed interim consolidated financial statements.
19

	NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
	(Tabular amounts are stated in thousands of Canadian dol ars 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 dril ing and completion and production services primarily to oil and natural gas and geothermal
	exploration and production companies in Canada, the United States and certain international locations.
	NOTE 2. BASIS OF PRESENTATION (a) Statement of Compliance These condensed interim consolidated financial statements have been prepared in accordance with International Accounting
	Standard 34, Interim Financial Reporting, using accounting policies consistent with International Financial Reporting
	Standards (		IFRS) as issued by the International Accounting Standards Board and interpretations of the International Financial
	Reporting Interpretations Committee.
	The condensed interim consolidated financial statements do not include all of the information required for ful annual
	financial statements and should be read in conjunction with the consolidated financial statements of the Corporation as at
	and for the year ended December 31, 2021.
	These condensed interim consolidated financial statements were prepared using accounting policies and methods of their
	application consistent with those used in the preparation of the Corporation’s consolidated audited annual financial
	statements for the year ended December 31, 2021.
	These condensed interim consolidated financial statements were approved by the Board of Directors on October 26, 2022.
	(b) Use of Estimates and Judgements The preparation of the condensed interim 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 preparation of the condensed interim consolidated financial statements may change as
	future events unfold, more experience is acquired, or the Corporation’s operating environment changes.
	Significant estimates and judgements used in the preparation of these condensed interim consolidated financial statements
	remained unchanged from those disclosed in the Corporation’s consolidated audited annual financial statements for the year
	ended December 31, 2021.

20

	NOTE 3. REVENUE (a)
	Disaggregation of revenue
	The fol owing table includes a reconciliation of disaggregated revenue by reportable segment. Revenue has been
	disaggregated by primary geographical market and type of service provided.
				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Three Months Ended September 30, 2022		Services	Services		and Other		Eliminations	Total
	United States		$ 189,744 $			4,496 $				— $	(5 ) $ 194,235
	Canada			148,525		52,146				—	(1,767 )		198,904
	International			36,196		—				—	—		36,196
			$ 374,465 $			56,642 $				— $	(1,772 ) $ 429,335

	Day rate/hourly services	$ 371,018 $			56,642 $				— $	(166 ) $ 427,494
	Shortfall payments/idle but contracted		1,161		—				—	—	1,161
	Other		2,286		—				—	(1,606 )	680
		$ 374,465 $			56,642 $				— $	(1,772 ) $ 429,335

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Three Months Ended September 30, 2021		Services	Services		and Other		Eliminations	Total
	United States	$	96,751 $		3,301 $				— $	— $ 100,052
	Canada		93,869		24,842				—	(1,287 )		117,424
	International		36,337		—				—	—		36,337
		$	226,957 $		28,143 $				— $	(1,287 ) $ 253,813

	Day rate/hourly services	$ 223,380 $			28,143 $				— $	(198 ) $ 251,325
	Directional services		2,028		—				—	—	2,028
	Other		1,549		—				—	(1,089 )	460
		$ 226,957 $			28,143 $				— $	(1,287 ) $ 253,813


				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Nine Months Ended September 30, 2022		Services	Services		and Other		Eliminations	Total
	United States		$ 495,183 $			12,833 $				— $	(33 ) $ 507,983
	Canada			379,115	115,088					—	(4,107 )		490,096
	International			108,611		—				—	—		108,611
			$ 982,909 $ 127,921 $							— $	(4,140 ) $ 1,106,690

	Day rate/hourly services	$ 949,078 $ 127,921 $							— $	(592 ) $ 1,076,407
	Shortfall payments/idle but contracted		1,791		—				—	—	1,791
	Turnkey drilling services		26,580		—				—	—		26,580
	Other		5,460		—				—	(3,548 )	1,912
		$ 982,909 $ 127,921 $							— $	(4,140 ) $ 1,106,690

21

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Nine Months Ended September 30, 2021		Services	Services		and Other		Eliminations	Total
	United States	$	269,553 $		9,149 $				— $	(1 ) $ 278,701
	Canada		234,659	72,205					—	(2,740 )		304,124
	International		108,820		—				—	—		108,820
		$	613,032 $	81,354 $					— $	(2,741 ) $ 691,645

	Day rate/hourly services	$ 590,995 $		81,354 $					— $	(358 ) $ 671,991
	Shortfall payments/idle but contracted		235		—				—	—	235
	Turnkey drilling services		9,630		—				—	—	9,630
	Directional services		7,871		—				—	—	7,871
	Other		4,301		—				—	(2,383 )	1,918
		$ 613,032 $		81,354 $					— $	(2,741 ) $ 691,645
	(b)	Seasonality
	Precision has operations that are carried on in Canada which represent approximately 44% (2021 - 44%) of consolidated
	revenue for the nine months ended September 30, 2022 and 36% (2021 - 36%) of consolidated total assets as at September
	30, 2022. The ability to move heavy equipment in Canadian oil and natural gas fields is dependent on weather conditions. As
	warm weather returns in the spring, the winter's frost comes out of the ground rendering many secondary roads incapable
	of supporting the weight of heavy equipment until they have thoroughly dried out. The duration of this “spring break-up” has
	a direct impact on Precision’s activity levels. In addition, many exploration and production areas in northern Canada are
	accessible only in winter months when the ground is frozen hard enough to support equipment. The timing of freeze up and
	spring break-up affects the ability to move equipment in and out of these areas. As a result, late March through May is
	traditionally Precision’s slowest time in this region.
	NOTE 4. SEGMENTED INFORMATION The Corporation has two reportable operating segments; Contract Dril ing Services and Completion and Production Services.
	Contract Drilling Services includes drilling rigs, procurement and distribution of oilfield supplies, and manufacture, sale and
	repair of dril ing equipment. Completion and Production Services includes service rigs, oilfield equipment rental and camp
	and catering services. The Corporation provides services primarily in Canada, the United States and certain international
	locations.
				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Three Months Ended September 30, 2022		Services		Services	and Other		Eliminations	Total
	Revenue	$	374,465 $		56,642 $				— $	(1,772 ) $ 429,335
	Earnings before income taxes, gain on		118,599		14,788 (13,826 )		—			119,561
	investments and other assets, loss on
	repurchase of unsecured senior notes,
	finance charges, foreign exchange, gain
	on asset disposals and depreciation and
	amortization
	Depreciation and amortization		63,513		3,598	2,337	—			69,448
	Gain on asset disposals		(6,780 )		(762 )				(696 )	—		(8,238 )
	Total assets		2,605,071		192,917 129,396		— 2,927,384
	Capital expenditures		49,647		1,289				167	—		51,103

22

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Three Months Ended September 30, 2021		Services	Services		and Other		Eliminations	Total
	Revenue	$	226,957 $	28,143 $					— $	(1,287 ) $ 253,813
	Earnings before income taxes, gain on		55,384		5,479	(15,455 )	—			45,408
	investments and other assets, loss on
	repurchase of unsecured senior notes,
	finance charges, foreign exchange, gain
	on asset disposals and depreciation and
	amortization
	Depreciation and amortization		62,751		4,004	2,676	—			69,431
	Gain on asset disposals		(3,035 )		(95 )				(131 )	—	(3,261 )
	Total assets		2,453,922	127,186 139,307			— 2,720,415
	Capital expenditures		18,337		1,143				20	—	19,500

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Nine Months Ended September 30, 2022		Services	Services		and Other		Eliminations	Total
	Revenue	$	982,909 $ 127,921 $						— $	(4,140 ) $ 1,106,690
	Earnings before income taxes, gain on		260,202	26,166 (65,853 )			—			220,515
	investments and other assets, loss on
	repurchase of unsecured senior notes,
	finance charges, foreign exchange, gain
	on asset disposals and depreciation and
	amortization
	Depreciation and amortization		190,306	10,202		7,154	—			207,662
	Gain on asset disposals		(19,243 )		(2,151 )				(758 )	—	(22,152 )
	Total assets		2,605,071	192,917 129,396			— 2,927,384
	Capital expenditures		122,696		3,847				398	—	126,941

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Nine Months Ended September 30, 2021		Services	Services		and Other		Eliminations	Total
	Revenue	$	613,032 $	81,354 $					— $	(2,741 ) $ 691,645
	Earnings before income taxes, gain on		163,118	17,533		(51,760 )	—			128,891
	investments and other assets, loss on
	repurchase of unsecured senior notes,
	finance charges, foreign exchange, gain
	on asset disposals and depreciation and
	amortization
	Depreciation and amortization		191,084	11,859		8,205	—			211,148
	Gain on asset disposals		(5,355 )		(551 )				(318 )	—	(6,224 )
	Total assets		2,453,922	127,186 139,307			— 2,720,415
	Capital expenditures		45,460		2,553				178	—	48,191

	A reconciliation of total segment earnings before income taxes, gain on investments and other assets, loss on repurchase of
	unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization to
	net earnings (loss) is as follows:

23

		Three Months Ended September 30,	Nine Months Ended September 30,
				2022	2021	2022	2021
	Total segment earnings before income taxes, gain	$		119,561 $	45,408	$ 220,515 $				128,891
	on investments and other assets, loss on
	repurchase of unsecured senior notes, finance
	charges, foreign exchange, gain on asset disposals
	and depreciation and amortization
	Deduct:
	Depreciation and amortization				69,448	69,431		207,662				211,148
	Gain on asset disposals				(8,238 )	(3,261 )		(22,152 )				(6,224 )
	Foreign exchange				1,344	464		1,362	104
	Finance charges				22,521	20,639		64,294				70,783
	Loss on repurchase of unsecured senior notes				—	—				—	9,520
	Gain on investments and other assets				(2,515 )	(327 )		(3,738 )	(327 )
	Income taxes				6,322	(3,506 )		10,863				(6,063 )
	Net earnings (loss)		$		30,679 $	(38,032 )	$ (37,776 ) $				(150,050 )
	NOTE 5. LONG-TERM DEBT

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

										September 30,	December 31,	September 30, December 31,
				2022	2021			2022	2021

	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							973	890
		US $		704 US $	704	$			2,306 $	2,223

	Long-Term Debt
	Senior Credit Facility	US $		141,000 US $	118,000	$ 194,791 $ 149,206
	Canadian Real Estate Credit Facility			—	—				16,667	17,667
	U.S. Real Estate Credit Facility				8,565	9,093				11,833	11,498
	Unsecured Senior Notes:
	7.125% senior notes due 2026				347,765	347,765				480,437	439,735
	6.875% senior notes due 2029				400,000	400,000				552,600	505,784
		US $		897,330 US $	874,858	1,256,328 1,123,890
	Less net unamortized debt issue costs and original												(15,229 )	(17,096 )
	issue discount
										$ 1,241,099 $ 1,106,794

24

				Canadian		Debt Issue
				Real Estate	U.S. Real	Costs and
		Senior Credit	Unsecured	Credit	Estate Credit	Original Issue
		Facility	Senior Notes	Facility	Facility	Discount	Total
	Current	$					— $	— $ 1,333 $	890 $				— $	2,223
	Long-term	149,206	945,519 17,667		11,498	(17,096 ) 1,106,794
	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	(116,909 )						—		—	—				—			(116,909 )
	Repayment of Real Estate Credit						—	—	(1,000 )	(677 )				—			(1,677 )
	Facility
		177,186	945,519 18,000		11,711	(17,096 ) 1,135,320
	Amortization of debt issue costs						—	—		—	—	1,883	1,883
	Foreign exchange adjustment		17,605	87,518							—	1,095				(16 )			106,202
	September 30, 2022	$ 194,791 $ 1,033,037 $ 18,000 $ 12,806 $				(15,229 ) $ 1,243,405

	Current	$					— $	— $ 1,333 $	973 $				— $	2,306
	Long-term	194,791 1,033,037 16,667			11,833	(15,229 ) 1,241,099
		$ 194,791 $ 1,033,037 $ 18,000 $ 12,806 $				(15,229 ) $ 1,243,405
	At September 30, 2022, Precision was in compliance with the covenants of the Senior Credit Facility and Real Estate Credit
	Facilities.
	NOTE 6. FINANCE CHARGES

			Three Months Ended September 30, Nine Months Ended September 30,
				2022	2021	2022	2021
	Interest:
	Long-term debt			$					20,898 $	19,138						$	59,575 $						59,893
	Lease obligations				757	681							2,082	2,060
	Other				226	1							412	6
	Income								(146 )	(22 )							(191 )	(178 )
	Amortization of debt issue costs, loan commitment fees			786	841							2,416	9,002
	and original issue discount
	Finance charges			$					22,521 $	20,639						$	64,294 $						70,783
	NOTE 7. SHARE-BASED COMPENSATION PLANS Liability Classified Plans

			Performance	Executive
		Restricted	Share	Performance	Non-Management
														Share Units (a)	Units (a)	Share Units(b)	Directors’ DSUs (c)	Total
	December 31, 2021												$	18,050 $	21,524 $							16,507 $	4,674 $ 60,755
	Expensed during period													18,747	31,912		4,172	3,379 58,210
	Settlement in shares													—	—						(14,083 )	— (14,083 )
	Reclassification from equity-settled													—	—	(406 )				—	(406 )
	plans
	Payments and redemptions													(14,321 )	(7,826 )							(6,190 )	— (28,337 )
	Foreign exchange													(826 )	(797 )	—				—			(1,623 )
	September 30, 2022													$	21,650 $	44,813 $		— $	8,053 $ 74,516

	Current												$	15,165 $	24,465 $		— $				— $ 39,630
	Long-term													6,485	20,348		—	8,053 34,886
													$	21,650 $	44,813 $		— $	8,053 $ 74,516
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	(a) Restricted Share Units and Performance Share Units A summary of the activity under the Restricted Share Unit (
		RSU) and the Performance Share Unit (PSU) plans are presented
	below:

				RSUs	PSUs
					Outstanding	Outstanding
	December 31, 2021			598,156		983,734
	Granted			179,720		242,160
	Redeemed			(266,223 )		(73,295 )
	Forfeited			(15,331 )		(13,874 )
	September 30, 2022				496,322		1,138,725
	(b) Executive Performance Share Units A summary of the activity under Executive Performance Share Unit (
							Executive PSU) share-based incentive plan is presented
	below:

						Executive PSUs
						Outstanding
	December 31, 2021					189,964
	Redeemed					(189,964 )
	September 30, 2022					—
	Pursuant to the Omnibus Plan, Precision elected to settle 131,950 vesting Executive PSUs in 263,900 common shares. (c) Non-Management Directors – Deferred Share Unit Plan A summary of the activity under the non-management director Deferred Share Unit (
			DSU) plan is presented below:

DSUs
						Outstanding
	December 31, 2021					104,591
	Granted					10,573
	September 30, 2022						115,164
	Equity Settled Plans (d) Option Plan A summary of the activity under the option plan is presented below:

				Weighted
							Range of	Average
	Canadian share options							Outstanding	Exercise Price		Exercise Price		Exercisable
	December 31, 2021							115,605 $ 87.00	— 146.40 $	123.35		115,605
	Exercised								(19,210 ) 87.00	— 89.20	88.50
	Forfeited								(61,935 ) 87.00	— 146.40	140.74
	September 30, 2022									34,460 $ 87.00	—		145.97 $	111.52	34,460

				Weighted
							Range of	Average
							Exercise Price	Exercise Price
	U.S. share options							Outstanding	(US$)		(US$)		Exercisable
	December 31, 2021							267,843 $ 51.20	— 115.80 $	80.43		257,854
	Exercised								(58,690 ) 51.20	— 68.80	60.10
	Forfeited								(32,205 ) 115.80	— 115.80	115.80
	September 30, 2022								176,948 $ 51.20	— 111.47 $	80.74		176,948

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	(e) Non-Management Directors – Deferred Share Unit Plan A summary of the activity under this share-based incentive plan is presented below:

DSUs
		Outstanding
	December 31, 2021 and September 30, 2022	1,470
	NOTE 8. SHAREHOLDERS’ CAPITAL

	Common shares		Number	Amount
	December 31, 2021		13,304,425	2,281,444
	Settlement of Executive PSUs		263,900	14,083
	Share options exercised		77,900	8,843
	Share repurchases		(130,395 )	(10,010 )
	September 30, 2022		13,515,830	2,294,360
	NOTE 9. PER SHARE AMOUNTS The fol owing tables reconcile the net earnings (loss) and weighted average shares outstanding used in computing basic and
	diluted net earnings (loss) per share:

				Three Months Ended September 30, Nine Months Ended September 30,
					2022	2021	2022	2021
	Net earnings (loss) - basic				$	30,679 $	(38,032 )	$	(37,776 ) $ (150,050 )
	Expense adjustment to equity compensation plans,				(94 )	—		—	—
	net of tax
	Net earnings (loss) - diluted				$	30,585 $	(38,032 )	$	(37,776 ) $ (150,050 )

				Three Months Ended September 30, Nine Months Ended September 30,
	(Stated in thousands)				2022	2021	2022	2021
	Weighted average shares outstanding – basic					13,580	13,304		13,549	13,319
	Effect of stock options and other equity compensation plans				1,464	—		—	—
	Weighted average shares outstanding – diluted					15,044	13,304		13,549	13,319
	NOTE 10. FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying values of cash, accounts receivable, and accounts payable and accrued liabilities approximates their fair value
	due to the relatively short period to maturity of the instruments. At the end of each reporting period, investments and other
	assets are measured at their estimated fair value, with changes in fair value recognized in profit or loss. Amounts drawn on
	the Senior Credit Facility and the Canadian and U.S. Real Estate Credit Facilities are measured at amortized cost and
	approximate fair value as this indebtedness is subject to floating rates of interest. The fair value of the unsecured senior notes
	at September 30, 2022 was approximately $948 mil ion (December 31, 2021 – $969 million). Financial assets and liabilities recorded or disclosed at fair value in the consolidated statement of financial position are
	categorized based upon 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 value determination and are as fol ows:
	Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
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	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 I 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 11. BUSINESS ACQUISITION On July 27, 2022, Precision acquired the well servicing business and associated rental assets (
		Acquired Operating 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 mil ion to be 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 wel -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 as 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 earnings (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
	Buildings			3,804
	Vehicles			900
	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 earnings (loss) in accordance with Precision’s existing depreciation policies for similar equipment types.
	NOTE 12. OTHER MATTERS During the second quarter of 2022, Precision experienced a wel control event on a turnkey dril ing job. For the nine month
	period ended September 30, 2022, Precision recognized revenue of nil and US$5 mil ion of dril ing-related operating costs,
	resulting in a US$5 mil ion job loss. Additional y, the net book value of the damaged dril ing rig was derecognized as a US$1
	mil ion charge to depreciation and amortization expense. As at September 30, 2022, Precision accrued US$19 mil ion of
	associated well site clean-up and remediation costs and accrued estimated insurance recoveries of US$18 mil ion. The
	provisions for the associated costs and insurance recoveries are based on management’s best estimates at September 30,
	2022. As the assessment of damage is ongoing, the provisions may be subject to change.
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	SHAREHOLDER INFORMATION	CORPORATE INFORMATION
	STOCK EXCHANGE LISTINGS	DIRECTORS
	Shares of Precision Drilling Corporation are listed on the	Michael R. Culbert
	Toronto Stock Exchange under the trading symbol PD and on	William T. Donovan
	the New York Stock Exchange under the trading symbol PDS.	Brian J. Gibson
		Steven W. Krablin
	TRANSFER AGENT AND REGISTRAR
		Lori A. Lancaster
	Computershare Trust Company of Canada
		Susan M. MacKenzie
	Calgary, Alberta
		Kevin O. Meyers
		Kevin A. Neveu
	TRANSFER POINT
		David W. Williams
	Computershare Trust Company NA
	Canton, Massachusetts
		OFFICERS
		Kevin A. Neveu
	Q3 2022 TRADING PROFILE
		President and Chief Executive Officer
	Toronto (TSX: PD)
	High: $90.27
		Veronica H. Foley
	Low: $64.82
		Senior Vice President, General Counsel and Chief
	Close: $69.93
		Compliance Officer
	Volume Traded: 6,391,930 New York (NYSE: PDS)
		Carey T. Ford
	High: US$70.21
		Senior Vice President and Chief Financial Officer
	Low: US$47.86

	Close: US$50.63
		Shuja U. Goraya
	Volume Traded: 4,095,661
		Chief Technology Officer
	ACCOUNT QUESTIONS
		Darren J. Ruhr
	Precision’s Transfer Agent can help you with a variety of
		Chief Administrative Officer
	shareholder related services, including: • change of address
		Gene C. Stahl
	• lost unit certificates	Chief Marketing Officer
	• transfer of shares to another person
	• estate settlement Computershare Trust Company of Canada	AUDITORS
		KPMG LLP
	100 University Avenue	Calgary, Alberta
	9th Floor, North Tower
	Toronto, Ontario M5J 2Y1	HEAD OFFICE
	Canada 1-800-564-6253 (tol free in Canada and the United States)	Suite 800, 525 8th Avenue SW
		Calgary, Alberta, Canada T2P 1G1
		Telephone: 403-716-4500
	1-514-982-7555 (international direct dialing)
		Facsimile: 403-264-0251
	Email: service@computershare.com
		Email: info@precisiondrilling.com
		www.precisiondrilling.com
	ONLINE INFORMATION
	To receive news releases by email, or to view this interim
	report online, please visit Precision’s website at
	www.precisiondrilling.com and refer to the Investor
	Relations section. Additional information relating to
	Precision, including the Annual Information Form, Annual
	Report and Management Information Circular has been filed
	with SEDAR and is available at www.sedar.com and on the
	EDGAR website www.sec.gov

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