Enhanced Investments - Financial Portal

Published: 2022-07-29

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
	(Stated in thousands of Canadian dol ars)
		June 30, 2022 December 31, 2021
	ASSETS
	Current assets:
	Cash	$			51,641 $	40,588
	Accounts receivable				316,529	255,740
	Inventory				26,547	23,429
	Total current assets				394,717	319,757
	Non-current assets:
	Income tax recoverable				1,521	—
	Deferred tax assets			840	867
	Right-of-use assets				51,553	51,440
	Property, plant and equipment		2,225,236			2,258,391
	Intangibles				21,678	23,915
	Investments and other assets				9,141	7,382
	Total non-current assets		2,309,969			2,341,995
	Total assets	$	2,704,686 $			2,661,752

	LIABILITIES AND EQUITY
	Current liabilities:
	Accounts payable and accrued liabilities	$			268,688 $	224,123
	Income taxes payable			695	839
	Current portion of lease obligations				11,602	10,935
	Current portion of long-term debt (Note 5)				2,240	2,223
	Total current liabilities				283,225	238,120

	Non-current liabilities:
	Share-based compensation (Note 7)				34,475	26,728
	Provisions and other				6,907	6,513
	Lease obligations				45,642	45,823
	Long-term debt (Note 5)		1,139,720			1,106,794
	Deferred tax liabilities				15,341	12,219
	Total non-current liabilities		1,242,085			1,198,077
	Shareholders’ equity:
	Shareholders’ capital (Note 8)		2,299,370			2,281,444
	Contributed surplus				74,057	76,311
	Deficit		(1,335,435 )			(1,266,980 )
	Accumulated other comprehensive income				141,384	134,780
	Total shareholders’ equity		1,179,376			1,225,555
	Total liabilities and shareholders’ equity	$	2,704,686 $			2,661,752


	See accompanying notes to condensed interim consolidated financial statements.
1

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)


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



	Revenue (Note 3)	$		326,016 $		201,359	$	677,355 $				437,832
	Expenses:
	Operating			240,552		140,955		499,526				301,576
	General and administrative			21,365		31,460		76,875				52,773
	Earnings before income taxes, loss (gain) on investments		64,099		28,944		100,954				83,483
	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			69,757		69,704		138,214				141,717
	Gain on asset disposals			(10,800 )	(904 )		(13,914 )				(2,963 )
	Foreign exchange			536	(296 )				18	(360 )
	Finance charges (Note 6)			21,043		27,698		41,773				50,144
	Loss on repurchase of unsecured senior notes			—		9,520				—		9,520
	Loss (gain) on investments and other assets			4,346	—	(1,223 )	—
	Loss before income taxes			(20,783 )		(76,778 )		(63,914 )				(114,575 )
	Income taxes:
	Current			635	788		1,605				1,572
	Deferred			3,193		(1,654 )		2,936				(4,129 )
				3,828	(866 )		4,541				(2,557 )
	Net loss	$		(24,611 ) $		(75,912 )	$	(68,455 ) $ (112,018 )
	Net loss per share: (Note 9)
	Basic	$		(1.81 ) $		(5.71 )	$	(5.06 ) $				(8.41 )
	Diluted	$		(1.81 ) $		(5.71 )	$	(5.06 ) $				(8.41 )

	See accompanying notes to condensed interim consolidated financial statements.
	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)


		Three Months Ended June 30,		Six Months Ended June 30,
	(Stated in thousands of Canadian dol ars)		2022	2021				2022	2021
	Net loss	$		(24,611 ) $		(75,912 )	$	(68,455 ) $ (112,018 )
	Unrealized gain (loss) on translation of assets and		44,638		(21,548 )		27,667				(42,546 )
	liabilities of operations denominated in foreign
	currency
	Foreign exchange gain (loss) on net investment hedge		(33,831 )		15,630		(21,063 )				31,539
	with U.S. denominated debt
	Tax expense related to net investment hedge of long-		—	(285 )				—	—
	term debt
	Comprehensive loss	$		(13,804 ) $		(82,115 )	$	(61,851 ) $ (123,025 )

	See accompanying notes to condensed interim consolidated financial statements.
2

	CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Three Months Ended June 30,		Six Months Ended June 30,
	(Stated in thousands of Canadian dol ars)			2022	2021				2022	2021
	Cash provided by (used in):
	Operations:
	Net loss	$	(24,611 ) $			(75,912 )	$			(68,455 ) $ (112,018 )
	Adjustments for:
	Long-term compensation plans		3,224			13,653				34,436	20,801
	Depreciation and amortization		69,757			69,704				138,214	141,717
	Gain on asset disposals		(10,800 )			(904 )				(13,914 )	(2,963 )
	Foreign exchange				422	464				151	1,022
	Finance charges		21,043			27,698				41,773	50,144
	Income taxes		3,828			(866 )				4,541	(2,557 )
	Other				275	(567 )				275	(564 )
	Loss (gain) on investments and other assets		4,346	—			(1,223 )	—
	Loss on repurchase of unsecured senior notes				—	9,520				—	9,520
	Income taxes paid		(2,576 )			(3,905 )				(2,803 )	(4,066 )
	Income taxes recovered				—	3				—	3
	Interest paid		(4,540 )			(26,412 )				(42,701 )	(45,178 )
	Interest received				5	131				34	176
	Funds provided by operations		60,373			12,607				90,328	56,037
	Changes in non-cash working capital balances		74,801			29,612				(20,448 )	1,604
			135,174			42,219				69,880	57,641
	Investments:
	Purchase of property, plant and equipment		(39,436 )			(20,255 )				(75,838 )	(28,691 )
	Proceeds on sale of property, plant and equipment		6,849			2,590				9,696	5,914
	Purchase of investments and other assets				(536 )	—			(536 )	—
	Changes in non-cash working capital balances		(3,659 )			7,515				(447 )	2,713
			(36,782 )			(10,150 )				(67,125 )	(20,064 )
	Financing:
	Issuance of long-term debt		6,405			676,341				94,529	696,341
	Repayments of long-term debt		(75,921 )			(712,034 )				(84,111 )	(761,459 )
	Repurchase of share capital		(5,000 )	—			(5,000 )	(4,294 )
	Issuance of common shares on the exercise of options		4,766	—			6,162	—
	Debt issuance costs				—	(9,550 )				—	(9,794 )
	Debt amendment fees				—	(910 )				—	(910 )
	Lease payments		(1,842 )			(1,709 )				(3,409 )	(3,330 )
	Changes in non-cash working capital balances				—	1,829				—	1,829
			(71,592 )			(46,033 )				8,171	(81,617 )
	Effect of exchange rate changes on cash				739	(430 )				127	(1,295 )
	Increase (decrease) in cash		27,539			(14,394 )				11,053	(45,335 )
	Cash, beginning of period		24,102			77,831				40,588	108,772
	Cash, end of period	$	51,641 $			63,437	$			51,641 $	63,437


	See accompanying notes to condensed interim consolidated financial statements.
3

	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		—						—	—	(68,455 ) (68,455 )
	Other comprehensive income for the period		—						—	6,604	—	6,604
	Share options exercised		8,843						(2,681 )	—	—	6,162
	Share repurchases		(5,000 )						—	—	—	(5,000 )
	Share-based compensation reclassification		14,083						(219 )	—	—	13,864
	Share-based compensation expense		—						646	—	—	646
	Balance at June 30, 2022	$ 2,299,370 $							74,057 $	141,384 $ (1,335,435 ) $ 1,179,376


					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		—						—	— (112,018 ) (112,018 )
	Other comprehensive loss for the period		—						—	(11,007 )	— (11,007 )
	Share repurchases		(4,294 )						—	—	—	(4,294 )
	Share-based compensation reclassification		—						(1,958 )	—	—	(1,958 )
	Share-based compensation expense		—						4,293	—	—	4,293
	Balance at June 30, 2021	$ 2,281,444 $		75,250 $	126,574 $ (1,201,612 ) $ 1,281,656


	See accompanying notes to condensed interim consolidated financial statements.
4

	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 July 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.
	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.
5

				Completion
			Contract		and		Inter-
			Dril ing	Production		Corporate	Segment
	Three Months Ended June 30, 2022		Services	Services		and Other		Eliminations	Total
	United States		$ 164,174 $		4,299 $					— $	(27 ) $ 168,446
	Canada			92,073	28,742					—	(1,297 )		119,518
	International			38,052		—				—	—		38,052
			$ 294,299 $		33,041 $					— $	(1,324 ) $ 326,016

	Day rate/hourly services	$ 280,010 $		33,041 $					— $	(233 ) $ 312,818
	Shortfall payments/idle but contracted		630		—				—	—	630
	Turnkey drilling services		11,842		—				—	—		11,842
	Other		1,817		—				—	(1,091 )	726
		$ 294,299 $		33,041 $					— $	(1,324 ) $ 326,016


				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Three Months Ended June 30, 2021		Services	Services		and Other		Eliminations	Total
	United States	$	90,128 $	2,540 $					— $	(1 ) $		92,667
	Canada		54,707	18,127					—	(563 )		72,271
	International		36,421		—				—	—		36,421
		$	181,256 $	20,667 $					— $	(564 ) $ 201,359

	Day rate/hourly services	$ 174,266 $		20,667 $					— $	(52 ) $ 194,881
	Shortfall payments/idle but contracted		119		—				—	—	119
	Turnkey drilling services		3,684		—				—	—		3,684
	Directional services		2,064		—				—	—		2,064
	Other		1,123		—				—	(512 )	611
		$ 181,256 $		20,667 $					— $	(564 ) $ 201,359


				Completion
			Contract		and		Inter-
			Dril ing	Production		Corporate	Segment
	Six Months Ended June 30, 2022		Services	Services		and Other		Eliminations	Total
	United States		$ 305,439 $		8,337 $					— $	(28 ) $ 313,748
	Canada			230,590	62,942					—	(2,340 )		291,192
	International			72,415		—				—	—		72,415
			$ 608,444 $		71,279 $					— $	(2,368 ) $ 677,355

	Day rate/hourly services	$ 578,060 $		71,279 $					— $	(426 ) $ 648,913
	Shortfall payments/idle but contracted		630		—				—	—	630
	Turnkey drilling services		26,580		—				—	—		26,580
	Other		3,174		—				—	(1,942 )		1,232
		$ 608,444 $		71,279 $					— $	(2,368 ) $ 677,355


6

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Six Months Ended June 30, 2021		Services	Services		and Other		Eliminations	Total
	United States	$	172,802 $	5,848 $					— $	(1 ) $ 178,649
	Canada		140,790	47,363					—	(1,453 )			186,700
	International		72,483		—				—	—			72,483
		$	386,075 $	53,211 $					— $	(1,454 ) $ 437,832

	Day rate/hourly services	$ 367,615 $		53,211 $					— $	(160 ) $ 420,666
	Shortfall payments/idle but contracted		235		—				—	—	235
	Turnkey drilling services		9,630		—				—	—			9,630
	Directional services		5,843		—				—	—			5,843
	Other		2,752		—				—	(1,294 )			1,458
		$ 386,075 $		53,211 $					— $	(1,454 ) $ 437,832

	(b)	Seasonality
	Precision has operations that are carried on in Canada which represent approximately 43% (2021 - 43%) of consolidated
	revenue for the six months ended June 30, 2022 and 35% (2021 - 36%) of consolidated total assets as at June 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 Dril ing Services includes dril ing 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-
				Dril ing	Production	Corporate	Segment
	Three Months Ended June 30, 2022			Services	Services	and Other	Eliminations	Total
	Revenue		$ 294,299 $ 33,041 $					— $ (1,324 ) $ 326,016
	Earnings before income taxes, loss (gain) on			70,429	4,839 (11,169 )		— 64,099
	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			64,140	3,254				2,363	— 69,757
	Gain on asset disposals		(10,581 )		(219 )			—	— (10,800 )
	Total assets		2,446,080 124,838 133,768				— 2,704,686
	Capital expenditures			37,821	1,558			57	— 39,436


7

				Completion
			Contract		and		Inter-
			Drilling	Production		Corporate	Segment
	Three Months Ended June 30, 2021		Services	Services		and Other		Eliminations	Total
	Revenue	$ 181,256 $ 20,667 $							— $	(564 ) $ 201,359
	Earnings before income taxes, loss (gain) on		47,703	4,252 (23,011 )			—			28,944
	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		63,101	3,854		2,749	—			69,704
	Gain on asset disposals		(595 )	(213 )		(96 )	—	(904 )
	Total assets	2,420,314 123,403 152,592					— 2,696,309
	Capital expenditures		19,685		506				64	—	20,255


				Completion
			Contract		and		Inter-
			Dril ing	Production		Corporate	Segment
	Six Months Ended June 30, 2022		Services	Services		and Other		Eliminations	Total
	Revenue	$ 608,444 $ 71,279 $							— $ (2,368 ) $ 677,355
	Earnings before income taxes, loss (gain) on	141,603 11,378 (52,027 )					— 100,954
	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	126,793		6,604		4,817	— 138,214
	Gain on asset disposals	(12,463 )		(1,389 )		(62 )	— (13,914 )
	Total assets	2,446,080 124,838 133,768					— 2,704,686
	Capital expenditures		73,049	2,558		231	— 75,838


				Completion
		Contract			and		Inter-
			Drilling	Production		Corporate	Segment
	Six Months Ended June 30, 2021		Services		Services		and Other		Eliminations	Total
	Revenue	$ 386,075 $ 53,211 $							— $	(1,454 ) $ 437,832
	Earnings before income taxes, loss (gain) on	107,734		12,054 (36,305 )			—			83,483
	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	128,333		7,855		5,529	— 141,717
	Gain on asset disposals		(2,320 )	(456 )		(187 )	—			(2,963 )
	Total assets	2,420,314 123,403 152,592					— 2,696,309
	Capital expenditures		27,123	1,410		158	—			28,691


	A reconciliation of total segment earnings before income taxes, loss (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 loss is as follows:

8


			Three Months Ended June 30,	Six Months Ended June 30,
					2022	2021	2022	2021
	Total segment earnings before income taxes, loss (gain)	$	64,099 $			28,944	$	100,954 $				83,483
	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			69,757			69,704		138,214				141,717
	Gain on asset disposals			(10,800 )			(904 )		(13,914 )				(2,963 )
	Foreign exchange					536	(296 )				18	(360 )
	Finance charges			21,043			27,698		41,773				50,144
	Loss on repurchase of unsecured senior notes					—	9,520				—	9,520
	Loss (gain) on investments and other assets			4,346			—	(1,223 )	—
	Income taxes			3,828			(866 )		4,541				(2,557 )
	Net loss		$	(24,611 ) $			(75,912 )	$	(68,455 ) $ (112,018 )
	NOTE 5. LONG-TERM DEBT

				Canadian Facilities and
			U.S. Denominated Facilities		Translated U.S. Facilities
					June 30,	December 31,	June 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				907	890
												US $			704 US $	704	$		2,240 $	2,223

	Long-Term Debt
	Senior Credit Facility	US $ 128,000 US $ 118,000 $ 164,767 $ 149,206
	Canadian Real Estate Credit Facility				—	—	17,000				17,667
	U.S. Real Estate Credit Facility				8,741	9,093		11,251				11,498
	Unsecured Senior Notes:
											7.125% senior notes due 2026			347,765			347,765	447,657 439,735
											6.875% senior notes due 2029			400,000			400,000	514,896 505,784
		US $ 884,506 US $ 874,858 1,155,571 1,123,890
	Less net unamortized debt issue costs and original issue											(15,851 )				(17,096 )
	discount
											$ 1,139,720 $ 1,106,794


9

							Debt Issue
				Canadian Real		U.S. Real	Costs and
		Senior Credit	Unsecured	Estate 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		94,529		—	—	—			—		94,529
	Repayment of Senior Credit Facility		(82,997 )		—	—	—			— (82,997 )
	Repayment of Real Estate Credit Facility							—	—	(667 )	(447 )			—		(1,114 )
		160,738 945,519		18,333		11,941 (17,096 ) 1,119,435
	Amortization of debt issue costs							—	—	—	—	1,248	1,248
	Foreign exchange adjustment		4,029	17,034		—	217			(3 )		21,277
	June 30, 2022	$ 164,767 $ 962,553 $ 18,333 $ 12,158 $ (15,851 ) $ 1,141,960

	Current	$						— $	— $	1,333 $	907 $			— $	2,240
	Long-term	164,767 962,553		17,000		11,251 (15,851 ) 1,139,720
		$ 164,767 $ 962,553 $ 18,333 $ 12,158 $ (15,851 ) $ 1,141,960

	At June 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 June 30,				Six Months Ended June 30,
				2022		2021	2022	2021
	Interest:
	Long-term debt			$	19,516 $						19,893	$	38,677 $				40,755
	Lease obligations				666		678		1,325	1,379
	Other				101		—	186	5
	Income				(11 )		(60 )		(45 )	(156 )
	Amortization of debt issue costs, loan commitment fees			771		7,187		1,630	8,161
	and original issue discount
	Finance charges			$	21,043 $						27,698	$	41,773 $				50,144

	NOTE 7. SHARE-BASED COMPENSATION PLANS Liability Classified Plans

							Non-
				Performance		Executive	Management
			Restricted		Share	Performance	Directors’

									Share Units (a)	Units (a)		Share Units(b)	DSUs (c)	Total
	December 31, 2021							$ 18,050 $ 21,524 $ 16,507 $	4,674 $ 60,755
	Expensed during period								16,990 27,001			4,172	4,504 52,667
	Settlement in shares								—		— (14,083 )				— (14,083 )
	Reclassification from equity-settled plans								—		—	(406 )			—	(406 )
	Payments and redemptions							(14,182 )	(7,496 )		(6,190 )			— (27,868 )
	Foreign exchange								(54 )		(51 )	—			—	(105 )
	June 30, 2022								$ 20,804 $ 40,978 $			— $	9,178 $ 70,960

	Current							$ 14,897 $ 21,588 $	— $			— $ 36,485
	Long-term								5,907 19,390			—	9,178 34,475
								$ 20,804 $ 40,978 $	— $	9,178 $ 70,960

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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

December 31, 2021

598,156

983,734

Granted

173,580

237,160

Redeemed

(265,757 )

(73,295 )

Forfeited

(13,484 )

(13,514 )

June 30, 2022

492,495

1,134,085

(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 )

June 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

6,378

June 30, 2022

110,969

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

Exercisable

December 31, 2021

115,605 $ 87.00 — 146.40 $

123.35 115,605

Exercised

(19,210 ) 87.00 — 89.20

88.50

Forfeited

(52,980 ) 146.40 — 146.40

146.40

June 30, 2022

43,415 $ 87.00 — 145.97 $

110.64

43,415

Weighted

Range of

Average

Exercise Price

U.S. share options

Outstanding

(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

June 30, 2022

176,948 $ 51.20 — 111.47 $

80.74 176,948

	(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 June 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		(60,796 )	(5,000 )
	June 30, 2022			13,585,429	2,299,370

	NOTE 9. PER SHARE AMOUNTS The following tables reconcile the net loss and weighted average shares outstanding used in computing basic and diluted net
	loss per share:

					Three Months Ended June 30,		Six Months Ended June 30,
						2022	2021	2022	2021
	Net loss - basic and diluted				$	(24,611 ) $	(75,912 )	$	(68,455 ) $ (112,018 )

					Three Months Ended June 30,		Six Months Ended June 30,
	(Stated in thousands)					2022	2021	2022	2021
	Weighted average shares outstanding – basic					13,588	13,304		13,533	13,327
	Effect of share options and other equity compensation					—	—	—	—
	plans
	Weighted average shares outstanding – diluted					13,588	13,304		13,533	13,327

	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 June 30, 2022 was approximately $881 million (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. 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.
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	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. OTHER MATTERS Late in the second quarter of 2022, Precision experienced a well control event on one of its turnkey drilling jobs. Precision
	recognized revenue of nil and US$5 million of drilling-related operating costs, resulting in a US$5 million project loss. The net book value of the damaged dril ing rig was derecognized resulting in a US$1 mil ion charge to depreciation and
	amortization expense. Precision accrued US$12 million of associated well site clean-up and remediation costs and accrued
	estimated insurance recoveries of US$16 million for the drilling rig and associated costs. The provisions for the associated costs and insurance recoveries are based on management’s best estimates at June 30, 2022.
	As the assessment of damage is ongoing, the provisions may be subject to change.
	NOTE 12. SUBSEQUENT EVENT Subsequent to June 30, 2022, Precision agreed to acquire the well servicing business and associated rental assets of High
	Arctic Energy Services Inc. for an aggregate purchase price of $38 mil ion, payable in cash. Precision adds to its Canadian well
	servicing operation a fleet of 80 service rigs (51 marketed and 29 inactive), rental assets, ancil ary support equipment,
	inventories and spares and real estate.
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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	William T. Donovan
	on the New York Stock Exchange under the trading symbol	Brian J. Gibson
	PDS.	Steven W. Krablin
		Susan M. MacKenzie
	TRANSFER AGENT AND REGISTRAR
		Kevin O. Meyers
	Computershare Trust Company of Canada
		Kevin A. Neveu
	Calgary, Alberta
		David W. Williams
	TRANSFER POINT
		OFFICERS
	Computershare Trust Company NA
		Kevin A. Neveu
	Canton, Massachusetts
		President and Chief Executive Officer
	Q2 2022 TRADING PROFILE
		Veronica H. Foley
	Toronto (TSX: PD)
		Chief Legal and Compliance Officer
	High: $109.29
	Low: $74.32
		Carey T. Ford
	Close: $82.71
		Senior Vice President and Chief Financial Officer
	Volume Traded: 8,663,509 New York (NYSE: PDS)

		Shuja U. Goraya
	High: US$87.19
		Chief Technology Officer
	Low: US$57.08
	Close: US$64.02
		Darren J. Ruhr
	Volume Traded: 5,077,530
		Chief Administrative Officer
	ACCOUNT QUESTIONS
		Gene C. Stahl
	Precision’s Transfer Agent can help you with a variety of
		Chief Marketing Officer
	shareholder related services, including: • change of address
		AUDITORS
	• lost unit certificates	KPMG LLP
	• transfer of shares to another person	Calgary, Alberta
	• estate settlement Computershare Trust Company of Canada
		HEAD OFFICE
	100 University Avenue	Suite 800, 525 8th Avenue SW
	9th Floor, North Tower	Calgary, Alberta, Canada T2P 1G1
	Toronto, Ontario M5J 2Y1	Telephone: 403-716-4500
	Canada 1-800-564-6253 (tol free in Canada and the United States)	Facsimile: 403-264-0251
		Email: info@precisiondrilling.com
		www.precisiondrilling.com
	1-514-982-7555 (international direct dialing)
	Email: service@computershare.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

14