Equibles

6-K

PRECISION DRILLING Corp (PDS)

6-K 2023-10-27 For: 2023-09-30
View Original
Added on April 10, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Section 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

For the month of, October 2023

Commission File Number: 001-14534

Precision Drilling Corporation

(Exact name of registrant as specified in its charter)

800, 525 - 8 Avenue S.W.Calgary, AlbertaCanada T2P 1G1

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F                                      Form 40-F      X

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: October 27, 2023 PRECISION DRILLING CORPORATION
By: /s/Carey T Ford
Name: Carey<br>T Ford
Title: Chief Financial Officer
Exhibit DESCRIPTION
--- ---
31.1 Certification of Chief Executive Officer, Kevin Neveu, regarding the “Certification of Interim Filings” pursuant to Form 52-109F2.
31.2 Certification of Chief Financial Officer, Carey Ford, regarding the “Certification of Interim Filings” pursuant to Form 52-109F2.
99.1 Management’s Discussion and Analysis for the period ended September 30, 2023.
99.2 Consolidated Financial Statements for the period ended September 30, 2023.

Exhibit 31.1

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, Kevin A. Neveu, President and Chief Executive Officer of Precision Drilling Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the<br>"interim filings") of Precision Drilling Corporation (the "issuer"), for the interim period ended September 30, 2023.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the<br>interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that<br>is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered<br>by the interim filings.
--- ---
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim<br>financial report together with the other financial information included in the interim filings fairly present in all material respects<br>the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim<br>filings.
--- ---
4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing<br>and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are<br>defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
--- ---
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's<br>other certifying officer and I have, as at the end of the period covered by the interim filings
--- ---
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance<br>that
--- ---
(i) material information relating to the issuer is made known to us by others, particularly during the period<br>in which the interim filings are being prepared; and
--- ---
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports<br>filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified<br>in securities legislation; and
--- ---
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding<br>the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s<br>GAAP.
--- ---
5.1 Control framework: The control framework the issuer's other certifying officer and I used<br>to design the issuer's ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (1992) and the Control Objectives<br>for Information and Related Technologies (COBIT).
--- ---
5.2 ICFR – material weakness relating to design: N/A.
--- ---
5.3 Limitation on scope of design: N/A.
--- ---
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in<br>the issuer’s ICFR that occurred during the period beginning on July 1, 2023 and ended on September 30, 2023 that has<br>materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
--- ---

Date: October 27, 2023

By: /s/Kevin A Neveu
Name: Kevin A. Neveu<br><br> <br>Title: President and Chief Executive Officer

Exhibit 31.2

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, Carey T. Ford, Chief Financial Officer of Precision Drilling Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the<br>"interim filings") of Precision Drilling Corporation (the "issuer"), for the interim period ended September 30, 2023.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the<br>interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that<br>is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered<br>by the interim filings.
--- ---
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim<br>financial report together with the other financial information included in the interim filings fairly present in all material respects<br>the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim<br>filings.
--- ---
4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing<br>and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are<br>defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
--- ---
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's<br>other certifying officer and I have, as at the end of the period covered by the interim filings
--- ---
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance<br>that
--- ---
(i) material information relating to the issuer is made known to us by others, particularly during the period<br>in which the interim filings are being prepared; and
--- ---
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports<br>filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified<br>in securities legislation; and
--- ---
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding<br>the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s<br>GAAP.
--- ---
5.1 Control framework: The control framework the issuer's other certifying officer and I used<br>to design the issuer's ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (1992) and the Control Objectives<br>for Information and Related Technologies (COBIT).
--- ---
5.2 ICFR – material weakness relating to design: N/A.
--- ---
5.3 Limitation on scope of design: N/A.
--- ---
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in<br>the issuer’s ICFR that occurred during the period beginning on July 1, 2023 and ended on September 30, 2023 that has<br>materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
--- ---

Date: October 27, 2023

By: /s/Carey T. Ford
Name: Carey T. Ford<br><br> <br>Title: Chief Financial Officer

Exhibit 99.1

PRECISION DRILLING ANNOUNCES 2023 THIRD QUARTER UNAUDITED FINANCIAL RESULTS

This report contains “forward-looking information and statements”within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risksto which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in thisreport. This report contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes,loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain onasset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending and Working Capital.These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not becomparable to similar measures used by other companies, see “Financial Measures and Ratios” later in this report.

Precision Drilling announces strong 2023 third quarter financial results:

· Revenue increased to $447 million compared with $429 million in the third quarter of 2022 driven by higher<br>drilling day rates, offset in part by lower drilling and service activity.
· Revenue per utilization day continues to be strong and grew 20% in Canada to $32,224 and 26% in the U.S.<br>to US$35,135 compared to the same quarter last year.
--- ---
· We continued to scale our Alpha^TM^ digital technologies and EverGreen^TM^ suite of<br>environmental solutions across our Super Triple rig fleet, increasing revenue from these offerings by 30% year over year. Approximately<br>75% of our Super Triple rig fleet is equipped with Alpha^TM^ and at least one EverGreen^TM^ product.
--- ---
· Adjusted EBITDA^(1)^ was $115 million and included $31 million of share-based compensation as<br>our share price increased 41% during the quarter, bringing our year to date share-based compensation to $22 million. In the third quarter<br>of 2022, Adjusted EBITDA was $120 million and included a $6 million charge for share-based compensation.
--- ---
· Net earnings were $20 million or $1.45 per share compared to $31 million or $2.26 per share in 2022. For<br>the first nine months of the year, we have generated net earnings of $10.45 per share.
--- ---
· During the quarter, we generated cash from operations of $89 million and repurchased and cancelled US$18<br>million of 2026 unsecured senior notes.
--- ---
· As at September 30, 2023, we have reduced total debt by $126 million since the beginning of the year and<br>remain on track to meet our 2023 debt reduction target of $150 million.
--- ---
· We ended the quarter with $49 million of cash and more than $600 million of available liquidity.
--- ---
· In Canada, we averaged 57 active rigs in the third quarter, similar to our activity for the same quarter<br>last year. Demand for our Super Triple and Super Single pad-capable fleets continues to exceed supply and we expect these<br>rigs to remain fully utilized well into 2024.
--- ---
· In the U.S., we averaged 41 active rigs compared to 57 in the third quarter of 2022 due to lower industry<br>activity year over year.
--- ---
· Internationally, we activated our seventh rig in late September and expect to activate our eighth rig<br>in the next few weeks. In 2024, we expect to have eight rigs working under long-term contracts, increasing our international earnings<br>approximately 50% over 2023.
--- ---
· Completion and Production Services generated revenue of $58 million and Adjusted EBITDA of $14 million,<br>largely consistent with the third quarter of 2022.
--- ---
· We expect the acquisition of CWC Energy Service Corp. (CWC) to be completed in the fourth quarter<br>and provide accretive cash flow on a per share basis in 2024.
--- ---
· In response to increased customer-funded rig upgrades and to facilitate the strategic purchase of certain<br>long-lead items, we have increased our 2023 capital spending budget from $195 million to $215 million.
--- ---
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- --- 
| 1 |

| --- |

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

For the three months ended September 30, For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts) 2023 2022 % Change 2023 2022 % Change
Revenue 446,754 429,335 4.1 1,430,983 1,106,690 29.3
Adjusted EBITDA^(1)^ 114,575 119,561 (4.2 ) 459,887 220,515 108.6
Net earnings (loss) 19,792 30,679 (35.5 ) 142,522 (37,776 ) (477.3 )
Cash provided by operations 88,500 8,142 987.0 330,316 78,022 323.4
Funds provided by operations^(1)^ 91,608 81,327 12.6 388,220 171,655 126.2
Cash used in investing activities 34,278 31,711 8.1 157,157 98,836 59.0
Capital spending by spend category^(1)^
Expansion and upgrade 13,479 25,461 (47.1 ) 39,439 50,606 (22.1 )
Maintenance and infrastructure 38,914 25,642 51.8 108,463 76,335 42.1
Proceeds on sale (6,698 ) (22,337 ) (70.0 ) (20,724 ) (32,033 ) (35.3 )
Net capital spending^(1)^ 45,695 28,766 58.9 127,178 94,908 34.0
Net earnings (loss) per share:
Basic 1.45 2.26 (35.8 ) 10.45 (2.79 ) (474.6 )
Diluted 1.45 2.03 (28.6 ) 9.84 (2.79 ) (452.7 )
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- ---

Operating Highlights

For the nine months ended September 30,
2023 2022 % Change 2023 2022 % Change
Contract drilling rig fleet 224 225 (0.4 ) 224 225 (0.4 )
Drilling rig utilization days:
U.S. 3,815 5,287 (27.8 ) 13,823 14,914 (7.3 )
Canada 5,284 5,432 (2.7 ) 15,247 14,461 5.4
International 554 552 0.4 1,439 1,638 (12.1 )
Revenue per utilization day:
U.S. (US) 35,135 27,847 26.2 35,216 25,864 36.2
Canada (Cdn) 32,224 26,927 19.7 32,583 25,843 26.1
International (US) 51,570 50,216 2.7 51,306 51,687 (0.7 )
Operating costs per utilization day:
U.S. (US) 21,655 18,220 18.9 20,217 18,484 9.4
Canada (Cdn) 18,311 16,893 8.4 19,239 16,803 14.5
Service rig fleet 121 135 (10.4 ) 121 135 (10.4 )
Service rig operating hours 46,894 52,340 (10.4 ) 144,944 120,994 19.8

All values are in US Dollars.

Financial Position

(Stated in thousands of Canadian dollars, except ratios) September 30, 2023 December 31, 2022
Working capital^(1)^ 177,740 60,641
Cash 49,065 21,587
Long-term debt 963,827 1,085,970
Total long-term financial liabilities 1,054,661 1,206,619
Total assets 2,808,201 2,876,123
Long-term debt to long-term debt plus equity ratio ^(1)^ 0.41 0.47
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- --- 
| 2 |

| --- |

Summary for the three months ended September 30, 2023:

· Revenue of $447 million was 4% higher than 2022 due to the further strengthening of drilling and service<br>revenue rates, partially offset by lower activity. Drilling rig utilization days decreased 28% and 3% in the U.S. and Canada, respectively,<br>while international activity remained consistent. Our service rig operating hours decreased 10% as compared with 2022.
· Adjusted EBITDA was $115 million as compared with $120 million in 2022. Our lower 2023 Adjusted EBITDA<br>was primarily the result of increased share-based compensation charges and lower activity, partially offset by higher revenue rates. Share-based<br>compensation was $31 million as compared with $6 million in 2022. Please refer to “Other Items” later in this report for additional<br>information on share-based compensation charges.
--- ---
· Adjusted EBITDA as a percentage of revenue was 26% as compared with 28% in 2022.
--- ---
· Our U.S. revenue per utilization day was US$35,135 compared with US$27,847 in 2022. The increase was primarily<br>the result of higher fleet average day rates and higher idle but contracted rig revenue. We recognized revenue from idle but contracted<br>rigs of US$6 million as compared with US$1 million in 2022. Consistent with 2022, we did not recognize revenue from turnkey projects during<br>the quarter. Revenue per utilization day, excluding the impact of idle but contracted rigs was US$33,543, compared to US$27,682 in 2022,<br>an increase of US$5,861 or 21%. Revenue per utilization day, excluding idle but contracted rigs, decreased US$1,014 from the second quarter<br>of 2023.
--- ---
· Our U.S. operating costs per utilization day increased to US$21,655<br>compared with US$18,220 in 2022. The increase was primarily due to higher rig operating costs, repairs and maintenance and the impact<br>of fixed costs being spread over fewer activity days. Our higher rig operating costs in the current period pertained to field rate increases<br>completed in the fourth quarter of 2022. U.S. operating costs per utilization day, excluding turnkey, was US$21,623 compared with US$18,236<br>in 2022. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day increased US$2,677. The increase<br>was primarily due to higher repairs and maintenance and the impact of fixed costs being spread over fewer activity days.
--- ---
· In Canada, revenue per utilization day was $32,224 compared with $26,927 in 2022. The increase was a result<br>of higher average day rates and customer cost recoveries. Sequentially, revenue per utilization day decreased $1,311 due to lower customer<br>cost recoveries.
--- ---
· Our Canadian operating costs per utilization day increased to $18,311, compared with $16,893 in 2022,<br>due to higher field wages, repairs and maintenance and costs that were recovered from our customers. Sequentially, our daily operating<br>costs decreased $3,021 due to lower repairs and maintenance, customer cost recoveries and operating overheads being spread over a higher<br>activity base.
--- ---
· Completion and Production Services revenue and Adjusted EBITDA were $58 million and $14 million, respectively, compared with $57 million<br>and $15 million in 2022.
--- ---
· We realized US$29 million of international contract drilling revenue compared with US$28 million in 2022.
--- ---
· General and administrative expenses were $44 million as compared with $25 million in 2022. The increase<br>was primarily due to higher share-based compensation charges.
--- ---
· Net finance charges were $20 million, a decrease of $3 million compared with 2022 and was the result of<br>lower outstanding long-term debt.
--- ---
· Cash provided by operations was $89 million compared with $8 million in 2022. We generated $92 million of funds provided by operations<br>compared with $81 million in 2022. Our increased day rates, revenue efficiency and operational leverage continued to drive higher cash<br>generation in the current quarter.
--- ---
· Capital expenditures were $52 million compared with $51 million in 2022. Capital spending by spend category (see “FINANCIAL<br>MEASURES AND RATIOS”) included $13 million for expansion and upgrades and $39 million for the maintenance of existing assets, infrastructure,<br>and intangible assets.
--- ---
· We repaid $26 million of debt, repurchasing and cancelling US$18 million of 2026 unsecured senior notes, and ended the quarter with<br>$49 million of cash and more than $600 million of available liquidity.
--- --- 
| 3 |

| --- |

Summary for the nine months ended September 30, 2023:

· Revenue for the first nine months of 2023 was $1,431 million, an increase of 29% from 2022.
· Adjusted EBITDA was $460 million as compared with $221 million in 2022. Our higher Adjusted EBITDA was<br>attributable to increased revenue rates, higher Canadian drilling and service activity and lower share-based compensation, partially offset<br>by lower U.S. and international drilling activity.
--- ---
· General and administrative costs were $83 million, a decrease of $19 million from 2022 primarily due to<br>lower share-based compensation, partially offset by higher labour-related costs and the impact of the weakening Canadian dollar on our<br>translated U.S. dollar-denominated costs.
--- ---
· Net finance charges were $64 million, consistent with 2022, as the impact of our lower debt balance was<br>offset by higher variable debt interest rates and higher translated U.S. dollar-denominated interest expense due to the weakening of the<br>Canadian dollar.
--- ---
· Cash provided by operations was $330 million as compared with $78 million in 2022. Funds provided by operations<br>in 2023 were $388 million, an increase of $217 million from the comparative period.
--- ---
· Capital expenditures were $148 million in 2023, an increase of $21 million from 2022. Capital spending<br>by spend category included $39 million for expansion and upgrades and $108 million for the maintenance of existing assets, infrastructure,<br>and intangible assets.
--- ---
· Year to date, we have reduced our total debt by $126 million through the full repayment of our Senior<br>Credit Facility and the repurchase and cancellation of US$48 million of our 2026 unsecured senior notes. In addition, we repurchased and<br>cancelled 193,616 common shares for $13 million under our Normal Course Issuer Bid (NCIB).
--- ---

STRATEGY

Precision’s vision is to be globally recognized as the High Performance,High Value provider of land drilling services. We work toward this vision by defining and measuring our results against strategic priorities that we establish at the beginning of every year.

Precision’s 2023 strategic priorities and the progress made during the third quarter and year to date are as follows:

1. Deliver High Performance, High Value service through operational excellence.
· Year to date, we have increased our Canadian drilling rig utilization days and well servicing rig operating<br>hours, maintaining our position as the leading provider of high-quality and reliable services in Canada.
--- ---
· Activated our seventh rig in the Middle East and expect to have an eighth rig working in the next few<br>weeks. These eight rigs represent over US$500 million in backlog revenue that stretches into 2028.
--- ---
· Announced the acquisition of CWC, expanding our Canadian well servicing business and our drilling fleets<br>in both the U.S. and Canada. The proposed transaction is expected to provide approximately $20 million in annual synergies and be accretive<br>on a 2024 cash flow per share basis.
--- ---
· Reinvested $148 million year to date into our equipment and infrastructure as we progress toward our total<br>expected 2023 investment of $215 million.
--- ---
2. Maximize free cash flow by increasing Adjusted EBITDA margins, revenue efficiency, and growing revenuefrom Alpha^TM^ technologies and EverGreen^TM^ suite of environmental solutions.
--- ---
· Realized third quarter daily operating margins (revenue per utilization day less operating costs per utilization<br>day) of $13,913 in Canada and US$13,480 in the U.S., representing increases of 39% and 40%, respectively, compared with the third quarter<br>of 2022.
--- ---
· Grew combined Alpha^TM^ technologies and EverGreen^TM^ suite of environmental solutions<br>third quarter revenue by 30% compared with the same quarter last year.
--- ---
· At September 30, we had 74 of our AC Super Triple rigs equipped with Alpha^TM^ technologies,<br>representing a 19% increase over the third quarter of 2022.
--- --- 
| 4 |

| --- | | · | Continued to scale our EverGreen^TM^ suite of environmental solutions. Approximately 75% of our<br>Super Triple fleet is equipped with at least one EverGreen^TM^ product, including 11 field deployed EverGreen^TM^<br>Battery Energy Storage Systems (BESS). | | --- | --- | | 3. | Reduce debt by at least $150 million and allocate 10% to 20% of free cash flow before debt repaymentsfor share repurchases. Long-term debt reduction target of $500 million between 2022 and 2025 and sustained Net Debt to Adjusted EBITDAratio^(1)^ of below 1.0 times by the end of 2025. | | --- | --- | | · | Generated significant third quarter cash from operations of $89 million which allowed us to repurchase<br>and cancel US$18 million of 2026 unsecured senior notes. | | --- | --- | | · | As of September 30, 2023, we have reduced debt by $126 million and remain committed to reducing debt by<br>at least $150 million in 2023. | | --- | --- | | · | We have allocated $13 million of free cash flow to share repurchases for the first nine months of the<br>year and in September we renewed our NCIB for an additional year as we believe it continues to be another tool to enhance shareholder<br>value. | | --- | --- | | · | We<br>remain committed to our long-term debt reduction target and reaching a sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times<br>by the end of 2025. | | --- | --- | | (1)<br> See “FINANCIAL MEASURES AND RATIOS.” | | --- |

OUTLOOK

Energy industry fundamentals continue to support drilling activity for oil and natural gas despite economic uncertainty and geopolitical instability. During the third quarter, persistent challenges and stresses from interest rate hikes and recessionary risks began to weaken, and commodity prices moved higher. While the recent conflict in the Middle East has had little direct impact on global oil and natural gas supply, an escalation of events and involvement from additional regional powers could disrupt supply in the world’s top oil producing region.

Today, oil prices are supported by increasing global demand and limited supply growth as OPEC continues to honour its lower production quotas and producers remain committed to returning capital to shareholders versus increasing production. Natural gas has demonstrated short-term price weaknesses; however, this lower-carbon energy source is becoming increasingly favored as countries around the world stress the importance of sustainability, decarbonization and energy security. With demand for Liquefied Natural Gas (LNG) exports growing and the next wave of North American LNG projects expected to begin coming online in 2025 (including LNG Canada), we anticipate a sustained period of elevated natural gas drilling activity in both the U.S. and Canada.

In Canada, Precision’s year to date drilling activity has surpassed 2022 levels and we expect high activity levels to continue into 2024, due to strong oil prices and increases in hydrocarbon export capacity. The Trans Mountain oil pipeline expansion and the Coastal GasLink pipeline are each expected to begin operations in the first quarter of 2024. Northwestern Alberta and Northeastern British Columbia natural gas developments are prime beneficiaries of the LNG Canada project and the January 2023 agreement between the Government of British Columbia and the Blueberry River First Nation, which has facilitated a significant increase in drilling license approvals and should lead to more drilling activity in the region. Large pad drilling programs are ideally suited for our Super Triple rigs, resulting in strong customer interest for these rigs for the next several years. Our Super Triple fleet is currently fully utilized and we expect customer demand to continue to exceed supply, driving higher day rates, daily operating margins and longer-term take-or-pay contracts. We are currently upgrading one of our Canadian rigs and expect to add it to our Super Triple Canadian fleet in January 2024 on a three-year term contract, bringing our fleet size to 30.

In the Canadian heavy oil market, we expect activity levels to remain strong as Canadian producers are benefiting from favorable oil pricing due to a weaker Canadian dollar exchange rate and improving heavy oil differentials. Precision’s Super Single rigs are well suited for long-term conventional heavy oil development in the oil sands and Clearwater formation. We expect our Super Single pad-capable rigs to be fully utilized well into 2024, driving higher day rates.

In the U.S., drilling activity had been increasing since mid-2020 but began to weaken in early 2023 due to lower natural gas prices and oil price volatility. As at October 25, 2023, the Baker Hughes’ active U.S. land rig count declined 21% from the start of the year. If oil prices remain stable and around today’s level, we expect demand to improve late in the fourth quarter and gain momentum in 2024 as customers embark on a new budget cycle and seek to maintain or possibly increase production levels and replenish inventories.

| 5 |

| --- |

Our Alpha^TM^ technologies and EverGreen^TM^ suite of environmental solutions continue to gain momentum and have become key competitive differentiators for our rigs as these offerings deliver exceptional value to our customers by reducing risks, well construction costs and carbon footprint. We currently have 11 EverGreen^TM^ BESS deployed in the field and have commitments for two additional deployments by year end. Precision’s EverGreen^TM^ BESS have proven to be an economically viable emissions reduction solution for our customers and we anticipate continued demand for additional deployments in 2024.

Internationally, we currently have seven rigs working on term contracts, four in Kuwait and three in the Kingdom of Saudi Arabia, increasing to eight in the next few weeks. In 2024, our international earnings are expected to increase approximately 50% over 2023 levels and provide stable and predictable cash flow that stretches into 2028. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure rig reactivations.

Precision is the leading provider of high-quality and reliable well services in Canada and the outlook for this business is positive. High customer demand for well maintenance and completion services is expected to add tightness to the availability of staffed service rigs, supporting healthy activity and pricing into the foreseeable future. In September, Precision announced the acquisition of CWC, which will allow us to enhance our Canadian well service offering with high-quality rigs in complementary geographic regions. The acquisition is expected to close in the fourth quarter of 2023 and provide accretive cash flow on a per share basis in 2024.

Commodity Prices

Third quarter average West Texas Intermediate and Western Canadian Select oil prices decreased 10% and 3%, respectively, from 2022. Average Henry Hub and AECO natural gas prices declined 66% and 42%, respectively from 2022.

For<br>the three months ended<br><br> <br>September 30, Year ended<br><br> <br>December 31,
2023 2022 2022
Average oil and natural gas prices
Oil
West Texas Intermediate (per barrel) (US$) 82.18 91.66 94.23
Western Canadian Select (per barrel) (US$) 69.39 71.56 78.15
Natural gas
United States
Henry Hub (per MMBtu) (US$) 2.66 7.89 6.51
Canada
AECO (per MMBtu) (CDN$) 2.61 4.47 5.43

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at October 25, 2023. For those quarters ending after September 30, 2023, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts.

Average for the quarter ended 2022 Average for the quarter ended 2023
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
Average rigs under term contract as of October 25, 2023:
U.S. 27 29 31 35 40 37 32 28
Canada 6 8 10 16 19 23 23 21
International 6 6 6 6 4 5 7 8
Total 39 43 47 57 63 65 62 57

The following chart outlines the average number of drilling rigs that we had under term contract for 2022 and the average number of rigs we have under term contract as at October 25, 2023.

| 6 |

| --- | | | | Average for the year ended | | | --- | --- | --- | --- | | | | 2022 | 2023 | | Average rigs under term contract<br><br> <br>as of October 25, 2023: | | | | | | U.S. | 31 | 34 | | | Canada | 10 | 22 | | | International | 6 | 6 | | Total | | 47 | 62 |

In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. Accordingly, our anticipated Canadian rigs under term contract may fluctuate as customers complete their commitments earlier than projected. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year. Internationally, we expect to have eight rigs operating under long-term contract by the end of 2023.

Drilling Activity

The following chart outlines the average number of drilling rigs that we had working or moving by quarter for the periods noted.

Average for the quarter ended<br><br> <br>2022 Average for the quarter ended<br><br> <br>2023
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30
Average Precision active rig count:
U.S. 51 55 57 60 60 51 41
Canada 63 37 59 66 69 42 57
International 6 6 6 6 5 5 6
Total 120 98 122 132 134 98 104

According to industry sources, as at October 25, 2023, the U.S. active land drilling rig count has decreased 21% from the same point last year while the Canadian active land drilling rig count has decreased 6%. To date in 2023, approximately 79% of the U.S. industry’s active rigs and 59% of the Canadian industry’s active rigs were drilling for oil targets, compared with 79% for the U.S. and 63% for Canada at the same time last year.

Capital Spending and Free Cash Flow Allocation

We remain committed to disciplined cash flow management, capital spending and returning capital to shareholders. In response to increased customer contracted rig upgrades and to facilitate the strategic purchase of certain long-lead items, capital spending in 2023 is expected to increase by $20 million to $215 million. By spend category, we expect to incur $155 million for sustaining, infrastructure and intangibles and $60 million for expansion and upgrades. We expect that the $215 million will be split as follows: $201 million in the Contract Drilling Services segment, $11 million in the Completion and Production Services segment, and $3 million in the Corporate segment. As at September 30, 2023, Precision had capital commitments of approximately $229 million with payments expected through 2026.

SEGMENTED FINANCIAL RESULTS

Precision’s operations are reported in two segments: Contract Drilling Services, which includes our drilling rig, oilfield supply and manufacturing divisions; and Completion and Production Services, which includes our service rig, rental and camp and catering divisions.

For the three months ended September 30, For the nine months ended September 30,
(Stated in thousands of Canadian dollars) 2023 2022 % Change 2023 2022 % Change
Revenue:
Contract Drilling Services 390,728 374,465 4.3 1,257,762 982,909 28.0
Completion and Production Services 57,573 56,642 1.6 178,257 127,921 39.3
Inter-segment eliminations (1,547 ) (1,772 ) (12.7 ) (5,036 ) (4,140 ) 21.6
446,754 429,335 4.1 1,430,983 1,106,690 29.3
Adjusted EBITDA:^(1)^
Contract Drilling Services 131,701 118,599 11.0 468,302 260,202 80.0
Completion and Production Services 14,118 14,788 (4.5 ) 39,031 26,166 49.2
Corporate and Other (31,244 ) (13,826 ) 126.0 (47,446 ) (65,853 ) (28.0 )
114,575 119,561 (4.2 ) 459,887 220,515 108.6
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- --- 
| 7 |

| --- |

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

For the three months ended September 30, For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted) 2023 2022 % Change 2023 2022 % Change
Revenue 390,728 374,465 4.3 1,257,762 982,909 28.0
Expenses:
Operating 247,937 246,442 0.6 759,750 692,169 9.8
General and administrative 11,090 9,424 17.7 29,710 30,538 (2.7 )
Adjusted EBITDA^(1)^ 131,701 118,599 11.0 468,302 260,202 80.0
Adjusted EBITDA as a percentage of<br> <br><br> <br>revenue^(1)^ 33.7 % 31.7 % 37.2 % 26.5 %
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- ---
United States onshore drilling statistics:^(1)^ 2023 2022
--- --- --- --- --- --- ---
Precision Industry^(2)^ Precision Industry^(2)^
Average number of active land rigs for quarters ended:
March 31 60 744 51 603
June 30 51 700 55 687
September 30 41 631 57 746
Year to date average 51 692 54 679
(1) United States lower 48 operations only.
--- ---
(2) Baker Hughes rig counts.
--- ---
Canadian onshore drilling statistics:^(1)^ 2023 2022
--- --- --- --- --- --- ---
Precision Industry^(2)^ Precision Industry^(2)^
Average number of active land rigs for quarters ended:
March 31 69 221 63 205
June 30 42 117 37 113
September 30 57 188 59 199
Year to date average 56 175 53 172
(1) Canadian operations only.
--- ---
(2) Baker Hughes rig counts.
--- ---

Revenue from Contract Drilling Services was $391 million, 4% higher than 2022, while Adjusted EBITDA increased 11% to $132 million. The increase in revenue and Adjusted EBITDA was primarily due to higher day rates, partially offset by lower North America drilling activity.

Drilling rig utilization days (drilling days plus move days) in the U.S. were 3,815, 28% lower than 2022. Drilling rig utilization days in Canada were 5,284, 3% lower than 2022. The movement in utilization days in both the U.S. and Canada was consistent with changes in industry activity. Drilling rig utilization days in our international business were 554, consistent with 2022.

Revenue per utilization day in the U.S. increased 26% from 2022 and was primarily the result of higher fleet average day rates and higher idle but contracted rig revenue. We recognized revenue from idle but contracted rigs of US$6 million as compared with US$1 million in 2022. Consistent with 2022, we did not recognize revenue from turnkey projects during the quarter. Drilling rig revenue per utilization day in Canada increased 20% due to higher average day rates and customer cost recoveries. Our international revenue per utilization day for the quarter was 3% higher than 2022 as our rigs commenced drilling under renewed long-term contracts.

In the U.S., 63% of utilization days were generated from rigs under term contract as compared with 54% in 2022. In Canada, 37% of our utilization days were generated from rigs under term contract, compared with 14% in 2022.

U.S. operating costs per utilization day increased 19% from 2022 and was primarily due to higher rig operating costs, repairs and maintenance and the impact of fixed costs being spread over fewer activity days. Our higher rig operating costs in the current period pertained to field rate increases completed in the fourth quarter of 2022. U.S. operating costs per utilization day, excluding turnkey, was US$21,623 compared with US$18,236 in 2022. Our Canadian operating costs per utilization day increased 8% as compared with 2022 and was due to higher field wages, repairs and maintenance and costs that were recovered from our customers.

Our general and administrative expenses increased $2 million as compared with 2022 and was primarily the result of higher share-based compensation charges and higher translated U.S. dollar-denominated costs.

| 8 |

| --- |

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

For the three months ended September 30, For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted) 2023 2022 % Change 2023 2022
Revenue 57,573 56,642 1.6 178,257 127,921 39.3
Expenses:
Operating 41,612 40,198 3.5 133,325 96,365 38.4
General and administrative 1,843 1,656 11.3 5,901 5,390 9.5
Adjusted EBITDA^(1)^ 14,118 14,788 (4.5 ) 39,031 26,166 49.2
Adjusted EBITDA as a percentage of revenue^(1)^ 24.5 % 26.1 % 21.9 % 20.5 %
Well servicing statistics:
Number of service rigs (end of period) 121 135 (10.4 ) 121 135 (10.4 )
Service rig operating hours 46,894 52,340 (10.4 ) 144,944 120,994 19.8
Service rig operating hour utilization 42 % 47 % 44 % 43 %
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- ---

Completion and Production Services revenue increased to $58 million, an increase of $1 million from 2022. Our increased revenue was due to higher service rates, offset by lower activity. Our third quarter service rig operating hours decreased 10% compared with 2022. Completion and Production Services generated 7% of its revenue from U.S. operations compared with 8% in 2022.

Operating costs as a percentage of revenue were 72% as compared with 71% in 2022. The increased percentage in 2023 was the result of higher labour-related costs. As compared to 2022, our third quarter general and administrative expenses increased 11%, primarily due to higher share-based compensation charges.

Adjusted EBITDA was $14 million as compared with $15 million in 2022. Our lower Adjusted EBITDA in 2023 was due to decreased activity, higher labour-related costs and higher share-based compensation, partially offset by increased service rates.

SEGMENT REVIEW OF CORPORATE AND OTHER

Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had negative Adjusted EBITDA of $31 million as compared with $14 million in 2022. Our higher current quarter Adjusted EBITDA was impacted by higher share-based compensation charges and higher translated U.S. dollar-denominated costs.

OTHER ITEMS

Share-based Incentive Compensation Plans

We have several cash and equity-settled share-based incentive plans for non-management directors, officers, and other eligible employees. Our accounting policies for each share-based incentive plan can be found in our 2022 Annual Report.

A summary of expense amounts under these plans during the reporting periods are as follows:

For the three months ended September 30, For the nine months ended September 30,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Cash settled share-based incentive plans 30,105 5,543 20,091 57,802
Equity settled share-based incentive plans 701 — 1,834 427
Total share-based incentive compensation plan expense 30,806 5,543 21,925 58,229
Allocated:
Operating 7,692 1,922 6,732 14,694
General and Administrative 23,114 3,621 15,193 43,535
30,806 5,543 21,925 58,229

Cash settled share-based compensation expense for the quarter was $30 million as compared with $6 million in 2022. The higher expense in 2023 was primarily due to our improved share price performance as compared with 2022.

During the first quarter of 2023, we issued Executive Restricted Share Units (Executive RSUs) to certain senior executives. Accordingly, our equity-settled share-based compensation expense for the quarter was $1 million as compared with nil in 2022.

| 9 |

| --- |

As at September 30, 2023, the majority of our share-based compensation plans were classified as cash-settled and will be impacted by changes in our share price. Although accounted for as cash-settled, Precision retains the ability to settle certain vested units in common shares at its discretion.

Finance Charges

Net finance charges were $20 million, a decrease of $3 million compared with 2022 and the result of lower outstanding long-term debt. Interest charges on our U.S. dollar-denominated long-term debt were US$13 million ($17 million) as compared with US$16 million ($20 million) in 2022.

Income Tax

Income tax expense for the quarter was $8 million as compared with $6 million in 2022. During the third quarter, we continued to not recognize deferred tax assets on certain Canadian and international operating losses.

Normal Course Issuer Bid

During the quarter, the Toronto Stock Exchange (TSX) approved the renewal of our Normal Course Issuer Bid. Pursuant to the NCIB, we are authorized to repurchase and cancel up to a maximum of 1,326,321 common shares. Purchases under the renewed NCIB may commence on September 19, 2023 and will terminate no later than September 18, 2024, or such earlier time as we complete our maximum purchases pursuant to the NCIB or provide notice of termination.

Cathedral Energy Services Ltd.

During the third quarter of 2023, we exercised 2 million warrants for $1 million in exchange for 2 million common shares of Cathedral Energy Services Ltd. (Cathedral). In addition, we divested 11 million common shares of Cathedral for net proceeds of $10 million.

LIQUIDITY AND CAPITAL RESOURCES

The oilfield services business is inherently cyclical in nature. To manage this, we focus on maintaining a strong balance sheet in order to have the financial flexibility to manage our growth and cash flow regardless of where we are in the business cycle. We maintain a variable operating cost structure so we can be responsive to changes in demand.

Our maintenance capital expenditures are tightly governed and highly responsive to activity levels with additional cost savings leverage provided through our internal manufacturing and supply divisions. Term contracts on expansion capital provide more certainty of future revenues and return on our capital investments.

Liquidity

Amount Availability Used for Maturity
Senior Credit Facility (secured)
US$447 million (extendible, revolving<br><br>term credit facility with US$353 million accordion feature) Nil drawn and US$55 million in outstanding letters of credit General corporate purposes June 18, 2025
Real estate credit facilities (secured)
US$9 million Fully drawn General corporate purposes November 19, 2025
$17 million Fully drawn General corporate purposes March 16, 2026
Operating facilities (secured)
$40 million Undrawn, except $20 million in<br> outstanding letters of credit Letters of credit and general<br><br>corporate purposes
US$15 million Undrawn Short-term working capital<br><br>requirements
Demand letter of credit facility (secured)
US$40 million Undrawn, except US$21 million in<br> outstanding letters of credit Letters of credit
Unsecured senior notes (unsecured)
US$299 million – 7.125% Fully drawn Debt redemption and repurchases January 15, 2026
US$400 million – 6.875% Fully drawn Debt redemption and repurchases January 15, 2029

As at September 30, 2023, we had $978 million outstanding under our Senior Credit Facility, Real Estate Credit Facilities and unsecured senior notes as compared with $1,103 million at December 31, 2022. The current blended cash interest cost of our debt is approximately 7.0%.

| 10 |

| --- |

During the quarter, we repurchased and cancelled US$18 million principal amount of our 2026 unsecured senior notes.

Senior Credit Facility

Our Senior Credit Facility requires that we comply with certain covenants including a leverage ratio of consolidated senior debt to consolidated Covenant EBITDA of less than 2.5:1. For purposes of calculating the leverage ratio, consolidated senior debt only includes secured indebtedness. The Senior Credit Facility 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.

The Senior Credit Facility matures on June 18, 2025.

Unsecured Senior Notes

The unsecured senior notes require that we comply with certain restrictive and financial covenants, including an incurrence based consolidated interest coverage ratio test of consolidated cash flow, as defined in the senior note agreements, to consolidated interest expense of greater than 2.0:1 for the most recent four consecutive fiscal quarters. In the event our consolidated interest coverage ratio is less than 2.0:1 for the most recent four consecutive fiscal quarters, the unsecured senior notes restrict our ability to incur additional indebtedness.

For further information, please see the unsecured senior note indentures which are available on SEDAR and EDGAR.

Covenants

As at September 30, 2023, we were in compliance with the covenants of our Senior Credit Facility and Real Estate Credit Facilities.

Covenant At September 30, 2023
Senior Credit Facility
Consolidated senior debt to consolidated covenant EBITDA^(1)^ <2.50 0.05
Consolidated covenant EBITDA to consolidated interest expense >2.50 6.74
Real Estate Credit Facilities
Consolidated covenant EBITDA to consolidated interest expense >2.50 6.74
(1) For purposes of calculating the leverage<br> ratio consolidated senior debt only includes secured indebtedness.
--- ---

Impact of foreign exchange rates

The following table summarizes the average and closing Canada-U.S. foreign exchanges rates.

For the three months ended September 30, For the nine months ended September 30, At December 31,
2023 2022 2023 2022 2022
Canada-U.S. foreign exchange rates
Average 1.34 1.31 1.35 1.28 —
Closing 1.36 1.38 1.36 1.38 1.36

Hedge of investments in foreign operations

We utilize foreign currency long-term debt to hedge our exposure to changes in the carrying value of our net investment in certain foreign operations as a result of changes in foreign exchange rates.

We have designated our U.S. dollar-denominated long-term debt as a net investment hedge in our U.S. operations and other foreign operations that have a U.S. dollar functional currency. To be accounted for as a hedge, the foreign currency denominated long-term debt must be designated and documented as such and must be effective at inception and on an ongoing basis. We recognize the effective amount of this hedge (net of tax) in other comprehensive income. We recognize ineffective amounts (if any) in net earnings (loss).

| 11 |

| --- |

QUARTERLY FINANCIAL SUMMARY

(Stated in thousands of Canadian dollars, except per share amounts) 2022 2023
Quarters ended December 31 March 31 June 30 September 30
Revenue 510,504 558,607 425,622 446,754
Adjusted EBITDA^(1)^ 91,090 203,219 142,093 114,575
Net earnings 3,483 95,830 26,900 19,792
Net earnings per basic share 0.27 7.02 1.97 1.45
Net earnings per diluted share 0.27 5.57 1.63 1.45
Funds provided by operations^(1)^ 111,339 159,653 136,959 91,608
Cash provided by operations 159,082 28,356 213,460 88,500
(Stated in thousands of Canadian dollars, except per share amounts) 2021 2022
--- --- --- --- --- --- --- ---
Quarters ended December 31 March 31 June 30 September 30
Revenue 295,202 351,339 326,016 429,335
Adjusted EBITDA^(1)^ 63,881 36,855 64,099 119,561
Net earnings (loss) (27,336 ) (43,844 ) (24,611 ) 30,679
Net earnings (loss) per basic share (2.05 ) (3.25 ) (1.81 ) 2.26
Net earnings (loss) per diluted share (2.05 ) (3.25 ) (1.81 ) 2.03
Funds provided by operations^(1)^ 62,681 29,955 60,373 81,327
Cash provided by (used in) operations 59,713 (65,294 ) 135,174 8,142
(1) See “FINANCIAL<br> MEASURES AND RATIOS.”
--- ---

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

Because of the nature of our business, we are required to make judgements and estimates in preparing our Condensed Consolidated Interim Financial Statements that could materially affect the amounts recognized. Our judgements and estimates are based on our past experiences and assumptions we believe are reasonable in the circumstances. The critical judgements and estimates used in preparing the Condensed Consolidated Interim Financial Statements are described in our 2022 Annual Report.

EVALUATION OF CONTROLS AND PROCEDURES

Based on their evaluation as at September 30, 2023, Precision’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to ensure that information required to be disclosed by the Corporation in reports that are filed or submitted to Canadian and U.S. securities authorities is recorded, processed, summarized and reported within the time periods specified in Canadian and U.S. securities laws. In addition, as at September 30, 2023, there were no changes in the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting. Management will continue to periodically evaluate the Corporation’s disclosure controls and procedures and internal control over financial reporting and will make any modifications from time to time as deemed necessary.

Based on their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements, and even those controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

| 12 |

| --- |

FINANCIAL MEASURES AND RATIOS

Non-GAAP Financial Measures<br><br> <br>****
We reference certain additional Non-Generally Accepted Accounting Principles (Non-GAAP) measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
Adjusted EBITDA We believe Adjusted EBITDA (earnings before income taxes, loss (gain) on<br> investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals<br> and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings (Loss) and our reportable<br> operating segment disclosures, is a useful measure because it gives an indication of the results from our principal business activities<br> prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization<br> charges.<br><br> <br><br><br> <br>The most directly comparable financial measure is net earnings (loss).
For the three months ended September 30, For the nine months ended September 30,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Adjusted EBITDA by segment:
Contract Drilling Services 131,701 118,599 468,302 260,202
Completion and Production Services 14,118 14,788 39,031 26,166
Corporate and Other (31,244 ) (13,826 ) (47,446 ) (65,853 )
Adjusted EBITDA 114,575 119,561 459,887 220,515
Depreciation and amortization 73,192 69,448 218,823 207,662
Gain on asset disposals (2,438 ) (8,238 ) (15,586 ) (22,152 )
Foreign exchange 363 1,344 (894 ) 1,362
Finance charges 19,618 22,521 63,946 64,294
Gain on repurchase of unsecured notes (37 ) — (137 ) —
Loss (gain) on investments and other assets (3,813 ) (2,515 ) 6,075 (3,738 )
Incomes taxes 7,898 6,322 45,138 10,863
Net earnings (loss) 19,792 30,679 142,522 (37,776 )
Funds Provided by (Used in) Operations We believe funds provided by (used in) operations, as reported in our Condensed<br> Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the funds our principal business<br> activities generate prior to consideration of working capital changes, which is primarily made up of highly liquid balances.<br><br> <br><br><br> <br><br><br> <br>The most directly comparable financial measure is cash provided by (used<br> in) operations.
Net Capital Spending We believe net capital spending is a useful measure as it provides an indication<br> of our primary investment activities.<br><br> <br><br><br> <br>The most directly comparable financial measure is cash provided by (used<br> in) investing activities.<br><br> <br><br><br> <br>Net capital spending is calculated as follows: 
| 13 |

| --- | | | For the three months ended September 30, | | | | | For the nine months ended September 30, | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | (Stated in thousands of Canadian dollars) | | 2023 | | 2022 | | | 2023 | | 2022 | | | Capital spending by spend category | | | | | | | | | | | | Expansion and upgrade | | 13,479 | | 25,461 | | | 39,439 | | 50,606 | | | Maintenance, infrastructure and intangibles | | 38,914 | | 25,642 | | | 108,463 | | 76,335 | | | | | 52,393 | | 51,103 | | | 147,902 | | 126,941 | | | Proceeds on sale of property, plant and equipment | | (6,698 | ) | (22,337 | ) | | (20,724 | ) | (32,033 | ) | | Net capital spending | | 45,695 | | 28,766 | | | 127,178 | | 94,908 | | | Business acquisitions | | — | | 10,200 | | | 28,000 | | 10,200 | | | Proceeds from sale of investments and other assets | | (10,013 | ) | — | | | (10,013 | ) | — | | | Purchase of investments and other assets | | 3,211 | | 73 | | | 5,282 | | 609 | | | Receipt of finance lease payments | | (64 | ) | — | | | (64 | ) | — | | | Changes in non-cash working capital balances | | (4,551 | ) | (7,328 | ) | | 6,774 | | (6,881 | ) | | Cash used in investing activities | | 34,278 | | 31,711 | | | 157,157 | | 98,836 | |

Working Capital We define working capital as current assets less current liabilities, as<br> reported in our Condensed Interim Consolidated Statements of Financial Position.<br><br> <br><br><br> <br>Working capital is calculated as follows:
September 30, December 31,
(Stated in thousands of Canadian dollars) 2023 2022
Current assets 477,396 470,670
Current liabilities 299,656 410,029
Working capital 177,740 60,641
Non-GAAP Ratios<br><br> <br>****
We reference certain additional Non-GAAP ratios that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
Adjusted EBITDA % of Revenue We believe Adjusted EBITDA as a percentage of consolidated revenue, as reported in our Condensed Interim Consolidated Statements of Net Earnings (Loss), provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.
Long-term debt to long-term debt plus equity We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total shareholders’ equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage.
Net Debt to Adjusted EBITDA We believe that the Net Debt (long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations.
Supplementary Financial Measures<br><br> <br>****
We reference certain supplementary financial measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
Capital Spending by Spend Category We provide additional disclosure to better depict the nature of our capital spending. Our capital spending is categorized as expansion and upgrade, maintenance and infrastructure, or intangibles. 
| 14 |

| --- |

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this report, including statements that contain words such as "could", "should", "can", "anticipate", "estimate", "intend", "plan", "expect", "believe", "will", "may", "continue", "project", "potential" and similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking information and statements").

In particular, forward-looking information and statements include, but are not limited to, the following:

· our strategic priorities for 2023;
· our capital expenditures, free cash flow allocation and debt reduction plan for 2023;
--- ---
· anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2023;
--- ---
· the average number of term contracts in place for 2023;
--- ---
· customer adoption of Alpha^TM^ technologies and EverGreen^TM^ suite of environmental<br>solutions;
--- ---
· timing and amount of accretive cash flow from acquired drilling and well servicing assets;
--- ---
· potential commercial opportunities and rig contract renewals; and
--- ---
· our future debt reduction plans.
--- ---

These forward-looking information and statements are based on certain assumptions and analysis made by Precision in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. These include, among other things:

· our ability to react to customer spending plans as a result of changes in oil and natural gas prices;
· the status of current negotiations with our customers and vendors;
--- ---
· customer focus on safety performance;
--- ---
· existing term contracts are neither renewed nor terminated prematurely;
--- ---
· our ability to deliver rigs to customers on a timely basis;
--- ---
· the impact of an increase/decrease in capital spending; and
--- ---
· the general stability of the economic and political environments in the jurisdictions where we operate.
--- ---

Undue reliance should not be placed on forward-looking information and statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks and uncertainties include, but are not limited to:

· volatility in the price and demand for oil and natural gas;
· fluctuations in the level of oil and natural gas exploration and development activities;
--- ---
· fluctuations in the demand for contract drilling, well servicing and ancillary oilfield services;
--- ---
· our customers’ inability to obtain adequate credit or financing to support their drilling and production<br>activity;
--- ---
· changes in drilling and well servicing technology, which could reduce demand for certain rigs or put us<br>at a competitive advantage;
--- ---
· shortages, delays and interruptions in the delivery of equipment supplies and other key inputs;
--- ---
· liquidity of the capital markets to fund customer drilling programs;
--- ---
· availability of cash flow, debt and equity sources to fund our capital and operating requirements, as<br>needed;
--- ---
· the impact of weather and seasonal conditions on operations and facilities;
--- ---
· competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services;
--- ---
· ability to improve our rig technology to improve drilling efficiency;
--- ---
· general economic, market or business conditions;
--- ---
· the availability of qualified personnel and management;
--- ---
· a decline in our safety performance which could result in lower demand for our services;
--- ---
· changes in laws or regulations, including changes in environmental laws and regulations such as increased<br>regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and greenhouse gas emissions, which could have an adverse<br>impact on the demand for oil and natural gas;
--- ---
· terrorism, social, civil and political unrest in the foreign jurisdictions where we operate;
--- ---
· fluctuations in foreign exchange, interest rates and tax rates; and
--- ---
· other unforeseen conditions which could impact the use of services supplied by Precision and Precision’s<br>ability to respond to such conditions.
--- ---

Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2022, which may be accessed on Precision’s SEDAR profile at www.sedar.com or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this report are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

15

Exhibit 99.2

CONDENSED INTERIMCONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars) September 30, 2023 December 31, 2022
ASSETS
Current assets:
Cash $ 49,065 $ 21,587
Accounts receivable 393,286 413,925
Inventory 35,045 35,158
Total current assets 477,396 470,670
Non-current assets:
Income tax recoverable 699 1,602
Deferred tax assets 454 455
Property, plant and equipment 2,238,680 2,303,338
Intangibles 18,047 19,575
Right-of-use assets 57,168 60,032
Finance lease receivables 5,112 —
Investments and other assets 10,645 20,451
Total non-current assets 2,330,805 2,405,453
Total assets $ 2,808,201 $ 2,876,123
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 280,519 $ 392,053
Income taxes payable 3,197 2,991
Current portion of lease obligations 13,650 12,698
Current portion of long-term debt (Note 5) 2,290 2,287
Total current liabilities 299,656 410,029
Non-current liabilities:
Share-based compensation (Note 7) 28,360 60,133
Provisions and other 7,331 7,538
Lease obligations 55,143 52,978
Long-term debt (Note 5) 963,827 1,085,970
Deferred tax liabilities 70,149 28,946
Total non-current liabilities 1,124,810 1,235,565
Shareholders’ equity:
Shareholders’ capital (Note 8) 2,306,545 2,299,533
Contributed surplus 74,389 72,555
Deficit (1,158,751 ) (1,301,273 )
Accumulated other comprehensive income 161,552 159,714
Total shareholders’ equity 1,383,735 1,230,529
Total liabilities and shareholders’ equity $ 2,808,201 $ 2,876,123

See accompanying notes to condensed interimconsolidated financial statements.

| 1 |

| --- |

CONDENSED INTERIMCONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) (UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts) 2023 2022 2023 2022
Revenue (Note 3) $ 446,754 $ 429,335 $ 1,430,983 $ 1,106,690
Expenses:
Operating 288,002 284,868 888,039 784,394
General and administrative 44,177 24,906 83,057 101,781
Earnings before income taxes, loss (gain) on<br>    investments and other assets, gain on <br>    repurchase of unsecured senior notes, <br>    finance charges, foreign exchange, gain on <br>    asset disposals, and depreciation and <br>    amortization 114,575 119,561 459,887 220,515
Depreciation and amortization 73,192 69,448 218,823 207,662
Gain on asset disposals (2,438 ) (8,238 ) (15,586 ) (22,152 )
Foreign exchange 363 1,344 (894 ) 1,362
Finance charges (Note 6) 19,618 22,521 63,946 64,294
Gain on repurchase of unsecured senior notes (37 ) — (137 ) —
Loss (gain) on investments and other assets (3,813 ) (2,515 ) 6,075 (3,738 )
Earnings (loss) before income taxes 27,690 37,001 187,660 (26,913 )
Income taxes:
Current 2,047 958 4,008 2,563
Deferred 5,851 5,364 41,130 8,300
7,898 6,322 45,138 10,863
Net earnings (loss) $ 19,792 $ 30,679 $ 142,522 $ (37,776 )
Net earnings (loss) per share: (Note 9)
Basic $ 1.45 $ 2.26 $ 10.45 $ (2.79 )
Diluted $ 1.45 $ 2.03 $ 9.84 $ (2.79 )

See accompanying notes to condensed interimconsolidated financial statements.

CONDENSED INTERIM CONSOLIDATED STATEMENTSOF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Net earnings (loss) $ 19,792 $ 30,679 $ 142,522 $ (37,776 )
Unrealized gain on translation of assets and<br>    liabilities of operations denominated in foreign<br>    currency 39,180 111,811 3,322 139,478
Foreign exchange loss on net investment hedge<br>    with U.S. denominated debt (24,616 ) (84,060 ) (1,484 ) (105,123 )
Comprehensive income (loss) $ 34,356 $ 58,430 $ 144,360 $ (3,421 )

See accompanying notes to condensed interim consolidated financialstatements.

| 2 |

| --- |

CONDENSED INTERIMCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Cash provided by (used in):
Operations:
Net earnings (loss) $ 19,792 $ 30,679 $ 142,522 $ (37,776 )
Adjustments for:
Long-term compensation plans 11,577 411 9,200 34,847
Depreciation and amortization 73,192 69,448 218,823 207,662
Gain on asset disposals (2,438 ) (8,238 ) (15,586 ) (22,152 )
Foreign exchange 1,275 773 (13 ) 924
Finance charges 19,618 22,521 63,946 64,294
Income taxes 7,898 6,322 45,138 10,863
Other — (2 ) (220 ) 273
Loss (gain) on investments and other assets (3,813 ) (2,515 ) 6,075 (3,738 )
Gain on repurchase of unsecured senior notes (37 ) — (137 ) —
Income taxes paid (187 ) (220 ) (2,395 ) (3,023 )
Income taxes recovered 4 10 7 10
Interest paid (35,500 ) (38,005 ) (79,702 ) (80,706 )
Interest received 227 143 562 177
Funds provided by operations 91,608 81,327 388,220 171,655
Changes in non-cash working capital balances (3,108 ) (73,185 ) (57,904 ) (93,633 )
88,500 8,142 330,316 78,022
Investments:
Purchase of property, plant and equipment (51,546 ) (51,103 ) (146,378 ) (126,941 )
Purchase of intangibles (847 ) — (1,524 ) —
Proceeds on sale of property, plant and equipment 6,698 22,337 20,724 32,033
Proceeds from sale of investments and other assets 10,013 — 10,013 —
Business acquisitions — (10,200 ) (28,000 ) (10,200 )
Purchase of investments and other assets (3,211 ) (73 ) (5,282 ) (609 )
Receipt of finance lease payments 64 — 64 —
Changes in non-cash working capital balances 4,551 7,328 (6,774 ) 6,881
(34,278 ) (31,711 ) (157,157 ) (98,836 )
Financing:
Issuance of long-term debt 23,600 50,360 162,649 144,889
Repayments of long-term debt (49,517 ) (34,475 ) (288,538 ) (118,586 )
Repurchase of share capital — (5,010 ) (12,951 ) (10,010 )
Issuance of common shares from the exercise<br>    of options — — — 6,162
Lease payments (2,410 ) (1,777 ) (6,413 ) (5,186 )
(28,327 ) 9,098 (145,253 ) 17,269
Effect of exchange rate changes on cash 251 2,878 (428 ) 3,005
Increase (decrease) in cash 26,146 (11,593 ) 27,478 (540 )
Cash, beginning of period 22,919 51,641 21,587 40,588
Cash, end of period $ 49,065 $ 40,048 $ 49,065 $ 40,048

See accompanying notes to condensed interimconsolidated financial statements.

| 3 |

| --- |

CONDENSED INTERIMCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(Stated in thousands of Canadian dollars) Shareholders’<br> Capital Contributed<br> Surplus Accumulated<br> Other<br> Comprehensive<br> Income Deficit Total<br> Equity
Balance at January 1, 2023 $ 2,299,533 $ 72,555 $ 159,714 $ (1,301,273 ) $ 1,230,529
Net earnings for the period — — — 142,522 142,522
Other comprehensive income<br>    for the period — — 1,838 — 1,838
Settlement of Executive Performance <br>    and Restricted Share Units 19,206 — — — 19,206
Share repurchases (12,951 ) — — — (12,951 )
Redemption of non-management <br>    directors share units 757 — — — 757
Share-based compensation expense — 1,834 — — 1,834
Balance at September 30, 2023 $ 2,306,545 $ 74,389 $ 161,552 $ (1,158,751 ) $ 1,383,735
(Stated in thousands of Canadian dollars) Shareholders’<br> Capital Contributed<br> Surplus Accumulated<br> Other<br> Comprehensive<br> Income Deficit Total<br> 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<br>    for the period — — 34,355 — 34,355
Share options exercised 8,843 (2,681 ) — — 6,162
Share repurchases (10,010 ) — — — (10,010 )
Share-based compensation<br>    reclassification 14,083 (219 ) — — 13,864
Share-based compensation expense — 646 — — 646
Balance at September 30, 2022 $ 2,294,360 $ 74,057 $ 169,135 $ (1,304,756 ) $ 1,232,796

See accompanying notes to condensed interimconsolidated financial statements.

| 4 |

| --- |

NOTES TO CONDENSEDINTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Tabular amountsare 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 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 full 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, 2022.

These condensed interim consolidated financial statements were prepared using accounting policies and methods of their application are consistent with those used in the preparation of the Corporation’s consolidated annual financial statements for the year ended December 31, 2022, except as noted in Note 2 (c).

These condensed interim consolidated financial statements were approved by the Board of Directors on October 25, 2023.

(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 annual financial statements for the year ended December 31, 2022.

(c) Significant Accounting Policies

Interests in equity-accounted investees

An associate is an entity for which the Corporation has significant influence and thereby has the power to participate in the financial and operational decisions but does not control or jointly control the investee. Investments in associates are accounted for using the equity method of accounting and are recognized at cost and subsequently adjusted for the proportionate share of the investee's net assets. The Corporation's consolidated financial statements include its share of the investee's net earnings (loss) and other comprehensive income (loss) until the date that significant influence ceases.

Foreign currency translation

Change in functional currency

On July 1, 2023, as a result of changing facts and circumstances in the current year, a subsidiary of the Corporation changed its functional currency from U.S. Dollars (USD) to Kuwaiti Dinar (KWD) to reflect the business activities within the primary economic environment in which the subsidiary operates. The changes in facts and circumstances that led to this determination included, but were not limited to, the expiration of multiple material USD denominated customer drilling contracts and the execution of multiple material KWD denominated customer drilling contracts. The change in functional currency was applied prospectively, in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates, on July 1, 2023, with the assets and liabilities of the subsidiary being converted into KWD from USD at a fixed exchange rate of USD1 : KWD3.24.

| 5 |

| --- |

NOTE 3. Revenue

(a) Disaggregation of revenue

The following table includes a reconciliation of disaggregated revenue by reportable segment. Revenue has been disaggregated by primary geographical market and type of service provided.

Three Months Ended September 30, 2023 Contract<br> Drilling<br> Services Completion<br> and<br> Production<br> Services Corporate<br> and Other Inter-<br> Segment<br> Eliminations Total
United States $ 179,827 $ 4,262 $ — $ (6 ) $ 184,083
Canada 172,546 53,311 — (1,541 ) 224,316
International 38,355 — — — 38,355
$ 390,728 $ 57,573 $ — $ (1,547 ) $ 446,754
Day rate/hourly services $ 380,519 $ 57,573 $ — $ (146 ) $ 437,946
Shortfall payments/idle but contracted 8,136 — — — 8,136
Other 2,073 — — (1,401 ) 672
$ 390,728 $ 57,573 $ — $ (1,547 ) $ 446,754 
| 6 |

| --- |

Three Months Ended September 30, 2022 Contract<br> Drilling<br> Services Completion<br> and<br> Production<br> Services Corporate<br> and Other Inter-<br> Segment<br> 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
Nine Months Ended September 30, 2023 Contract<br> Drilling<br> Services Completion<br> and<br> Production<br> Services Corporate<br> and Other Inter-<br> Segment<br> Eliminations Total
United States $ 655,154 $ 11,946 $ — $ (23 ) $ 667,077
Canada 503,312 166,311 — (5,013 ) 664,610
International 99,296 — — — 99,296
$ 1,257,762 $ 178,257 $ — $ (5,036 ) $ 1,430,983
Day rate/hourly services $ 1,226,836 $ 178,257 $ — $ (383 ) $ 1,404,710
Shortfall payments/idle but contracted 15,377 — — — 15,377
Turnkey drilling services 8,988 — — — 8,988
Other 6,561 — — (4,653 ) 1,908
$ 1,257,762 $ 178,257 $ — $ (5,036 ) $ 1,430,983
Nine Months Ended September 30, 2022 Contract<br> Drilling<br> Services Completion<br> and<br> Production<br> Services Corporate<br> and Other Inter-<br> Segment<br> 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
(b) Seasonality

Precision has operations that are carried on in Canada which represent approximately 46% (2022 – 44%) of consolidated revenue for the nine months ended September 30, 2023 and 37% (2022 – 36%) of consolidated total assets as at September 30, 2023. 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.

| 7 |

| --- |

NOTE 4. SEGMENTED INFORMATION

The Corporation has two reportable operating segments; Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, procurement and distribution of oilfield supplies, and manufacture, sale and repair of drilling 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.

Three Months Ended September 30, 2023 Contract<br> Drilling<br> Services Completion<br> and<br> Production<br> Services Corporate<br> and Other Inter-<br> Segment<br> Eliminations Total
Revenue $ 390,728 $ 57,573 $ — $ (1,547 ) $ 446,754
Earnings before income taxes, loss (gain)<br>    on investments and other assets, gain on <br>    repurchase of unsecured senior notes, <br>    finance charges, foreign exchange, <br>    gain on asset disposals, and <br>    depreciation and amortization 131,701 14,118 (31,244 ) — 114,575
Depreciation and amortization 67,431 3,485 2,276 — 73,192
Gain on asset disposals (2,402 ) (22 ) (14 ) — (2,438 )
Total assets 2,494,557 172,127 141,517 — 2,808,201
Capital expenditures 48,517 2,818 1,058 — 52,393 
| 8 |

| --- | | Three Months Ended September 30, 2022 | Contract<br> Drilling<br> Services | | | Completion<br> and<br> Production<br> Services | | | Corporate<br> and Other | | | Inter-<br> Segment<br> Eliminations | | | Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | $ | 374,465 | | $ | 56,642 | | $ | — | | $ | (1,772 | ) | $ | 429,335 | | | Earnings before income taxes, loss (gain)<br>    on investments and other assets, gain on <br>    repurchase of unsecured senior notes, <br>    finance charges, foreign exchange, <br>    gain on asset disposals, and <br>    depreciation and amortization | | 118,599 | | | 14,788 | | | (13,826 | ) | | — | | | 119,561 | | | 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 | | | Nine Months Ended September 30, 2023 | Contract<br> Drilling<br> Services | | | Completion<br> and<br> Production<br> Services | | | Corporate<br> and Other | | | Inter-<br> Segment<br> Eliminations | | | Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | $ | 1,257,762 | | $ | 178,257 | | $ | — | | $ | (5,036 | ) | $ | 1,430,983 | | | Earnings before income taxes, loss (gain)<br>    on investments and other assets, gain on <br>    repurchase of unsecured senior notes, <br>    finance charges, foreign exchange, <br>    gain on asset disposals, and <br>    depreciation and amortization | | 468,302 | | | 39,031 | | | (47,446 | ) | | — | | | 459,887 | | | Depreciation and amortization | | 201,137 | | | 10,854 | | | 6,832 | | | — | | | 218,823 | | | Gain on asset disposals | | (14,688 | ) | | (736 | ) | | (162 | ) | | — | | | (15,586 | ) | | Total assets | | 2,494,557 | | | 172,127 | | | 141,517 | | | — | | | 2,808,201 | | | Capital expenditures | | 138,716 | | | 7,043 | | | 2,143 | | | — | | | 147,902 | | | Nine Months Ended September 30, 2022 | Contract<br> Drilling<br> Services | | | Completion<br> and<br> Production<br> Services | | | Corporate<br> and Other | | | Inter-<br> Segment<br> Eliminations | | | Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | $ | 982,909 | | $ | 127,921 | | $ | — | | $ | (4,140 | ) | $ | 1,106,690 | | | Earnings before income taxes, loss (gain)<br>    on investments and other assets, gain on <br>    repurchase of unsecured senior notes, <br>    finance charges, foreign exchange, <br>    gain on asset disposals, and <br>    depreciation and amortization | | 260,202 | | | 26,166 | | | (65,853 | ) | | — | | | 220,515 | | | 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 | |

| 9 |

| --- |

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

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Total segment earnings before income taxes, loss (gain)<br>    on investments and other assets, gain on<br>    repurchase of unsecured senior notes, <br>    finance charges, foreign exchange, gain on <br>    asset disposals, and depreciation and amortization $ 114,575 $ 119,561 $ 459,887 $ 220,515
Deduct:
Depreciation and amortization 73,192 69,448 218,823 207,662
Gain on asset disposals (2,438 ) (8,238 ) (15,586 ) (22,152 )
Foreign exchange 363 1,344 (894 ) 1,362
Finance charges 19,618 22,521 63,946 64,294
Gain on repurchase of unsecured senior notes (37 ) — (137 ) —
Loss (gain) on investments and other assets (3,813 ) (2,515 ) 6,075 (3,738 )
Income taxes 7,898 6,322 45,138 10,863
Net earnings (loss) $ 19,792 $ 30,679 $ 142,522 $ (37,776 )

NOTE 5. LONG-TERM DEBT

U.S. Denominated Facilities Canadian Facilities and Translated <br><br>U.S. Facilities
September 30, December 31, September 30, December 31,
2023 2022 2023 2022
Current Portion of Long-Term Debt
Canadian Real Estate Credit Facility US$ — US$ — $ 1,333 $ 1,333
U.S. Real Estate Credit Facility 704 704 957 954
US$ 704 US$ 704 $ 2,290 $ 2,287
Long-Term Debt
Senior Credit Facility US$ — US$ 44,000 $ — $ 59,620
Canadian Real Estate Credit Facility — — 15,334 16,334
U.S. Real Estate Credit Facility 7,861 8,389 10,679 11,368
Unsecured Senior Notes:
7.125% senior notes due 2026 299,330 347,765 406,631 471,225
6.875% senior notes due 2029 400,000 400,000 543,387 542,004
US$ 707,191 US$ 800,154 976,031 1,100,551
Less net unamortized debt issue costs<br>    and original issue discount (12,204 ) (14,581 )
$ 963,827 $ 1,085,970 
| 10 |

| --- | | | Senior Credit <br><br>Facility | | | Unsecured <br><br>Senior Notes | | | Canadian Real <br><br>Estate Credit <br><br>Facility | | | U.S. Real <br><br>Estate Credit <br><br>Facility | | | Debt Issue <br><br>Costs and <br><br>Original Issue <br><br>Discount | | | Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Current | $ | — | | $ | — | | $ | 1,333 | | $ | 954 | | $ | — | | $ | 2,287 | | | Long-term | | 59,620 | | | 1,013,229 | | | 16,334 | | | 11,368 | | | (14,581 | ) | | 1,085,970 | | | December 31, 2022 | | 59,620 | | | 1,013,229 | | | 17,667 | | | 12,322 | | | (14,581 | ) | | 1,088,257 | | | Changes from financing cash flows: | | | | | | | | | | | | | | | | | | | | Proceeds from Senior Credit Facility | | 162,649 | | | — | | | — | | | — | | | — | | | 162,649 | | | Repayment of unsecured senior notes | | — | | | (64,611 | ) | | — | | | — | | | — | | | (64,611 | ) | | Repayment of Senior Credit Facility | | (222,216 | ) | | — | | | — | | | — | | | — | | | (222,216 | ) | | Repayment of Real Estate Credit <br>    Facility | | — | | | — | | | (1,000 | ) | | (711 | ) | | — | | | (1,711 | ) | | | | 53 | | | 948,618 | | | 16,667 | | | 11,611 | | | (14,581 | ) | | 962,368 | | | Gain on repurchase of unsecured senior <br>    notes | | — | | | (137 | ) | | — | | | — | | | — | | | (137 | ) | | Amortization of debt issue costs | | — | | | — | | | — | | | — | | | 2,377 | | | 2,377 | | | Foreign exchange adjustment | | (53 | ) | | 1,537 | | | — | | | 25 | | | — | | | 1,509 | | | September 30, 2023 | $ | — | | $ | 950,018 | | $ | 16,667 | | $ | 11,636 | | $ | (12,204 | ) | $ | 966,117 | | | Current | $ | — | | $ | — | | $ | 1,333 | | $ | 957 | | $ | — | | $ | 2,290 | | | Long-term | | — | | | 950,018 | | | 15,334 | | | 10,679 | | | (12,204 | ) | | 963,827 | | | September 30, 2023 | $ | — | | $ | 950,018 | | $ | 16,667 | | $ | 11,636 | | $ | (12,204 | ) | $ | 966,117 | |

As at September 30, 2023, 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,
2023 2022 2023 2022
Interest:
Long-term debt $ 17,990 $ 20,898 $ 58,863 $ 59,575
Lease obligations 948 757 2,719 2,082
Other 105 226 293 412
Income (342 ) (146 ) (702 ) (191 )
Amortization of debt issue costs, loan commitment fees<br>    and original issue discount 917 786 2,773 2,416
Finance charges $ 19,618 $ 22,521 $ 63,946 $ 64,294 
| 11 |

| --- |

NOTE 7. SHARE-BASED COMPENSATION PLANS

Liability Classified Plans

Restricted<br> Share Units ^(a)^ Performance<br> Share <br> Units ^(a)^ Non-<br><br>Management<br> Directors’ <br><br>DSUs ^(b)^ Total
December 31, 2022 $ 38,190 $ 100,858 $ 12,297 $ 151,345
Expensed during period 8,615 12,402 (926 ) 20,091
Settlement in shares (2,102 ) (17,104 ) (757 ) (19,963 )
Payments and redemptions (26,524 ) (47,846 ) (385 ) (74,755 )
Foreign exchange 12 21 — 33
September 30, 2023 $ 18,191 $ 48,331 $ 10,229 $ 76,751
Current $ 14,274 $ 34,117 $ — $ 48,391
Long-term 3,917 14,214 10,229 28,360
$ 18,191 $ 48,331 $ 10,229 $ 76,751
(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<br> Outstanding PSUs<br> Outstanding
December 31, 2022 495,168 1,136,671
Granted 65,507 121,350
Redeemed (266,191 ) (437,113 )
Forfeited (9,832 ) (11,705 )
September 30, 2023 284,652 809,203
(b) Non-Management Directors – Deferred Share Units Plan
--- ---

A summary of the activity under the non-management director Deferred Share Unit (DSU) plan is presented below:

DSUs<br> Outstanding
December 31, 2022 118,774
Granted 12,458
Redeemed (18,830 )
September 30, 2023 112,402

During the second quarter of 2023, 18,830 DSUs were redeemed upon the retirement of a non-management director. Precision elected to settle the redemption of DSUs through a combination of cash and common shares.

| 12 |

| --- |

Equity Settled Plans

(c) Executive Restricted Share Units Plan

Precision granted Executive RSUs to certain senior executives with the intention of settling them in voting shares of the Corporation either issued from treasury or purchased in the open market. Granted units vest annually over a three-year term.

Executive RSUs <br><br>Outstanding Weighted Average <br><br>Fair Value
December 31, 2022 — $ —
Granted 46,740 96.90
September 30, 2023 46,740 $ 96.90

The per unit weighted average fair value of the Executive RSUs granted during 2023 was $96.90 estimated on the grant date using a Black-Scholes option pricing model with the following assumptions: average risk-free interest rate of 4%, average expected life of two years, expected forfeiture rate of 5% and expected volatility of 68%. Included in net earnings (loss) for the three and nine months ended September 30, 2023 were expenses of $1 million (2022 – nil) and $2 million (2022 – nil) respectively.

(d) Option Plan

A summary of the activity under the option plan is presented below:

Canadian share options Outstanding Range of<br>  Exercise Price Weighted<br> Average<br> Exercise Price Exercisable
December 31, 2022 and September 30, 2023 23,055 $ 87.00 — 145.97 $ 113.01 23,055
U.S. share options Outstanding Range of  Exercise Price (US) Weighted Average Exercise Price  (US) Exercisable
--- --- --- --- --- --- --- --- --- ---
December 31, 2022 141,748 — 111.47 141,748
Forfeited (13,350 ) — 100.40
September 30, 2023 128,398 — 111.47 128,398

All values are in US Dollars.

(e) Non-Management Directors – Deferred Share Unit Plan

As at September 30, 2023, there were 1,470 (2022 – 1,470) deferred share units outstanding.

NOTE 8. SHAREHOLDERS’ CAPITAL

Common shares Number Amount
December 31, 2022 13,558,525 2,299,533
Settlement of PSUs and RSUs 230,336 19,206
Share repurchases (193,616 ) (12,951 )
Redemption of non-management directors share units 12,494 757
September 30, 2023 13,607,739 2,306,545
(a) Normal Course Issuer Bid
--- ---

During the third quarter of 2023, the Toronto Stock Exchange (TSX) approved the renewal of Precision's Normal Course Issuer Bid (NCIB). Pursuant to the NCIB, the Corporation has been authorized by the TSX to repurchase and cancel up to a maximum of 1,326,321 common shares. The NCIB will terminate no later than September 18, 2024. Prior to the renewal of the NCIB, Precision had repurchased and cancelled 193,616 common shares for $13 million in 2023.

| 13 |

| --- |

NOTE 9. PER SHARE AMOUNTS

The following tables reconcile 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,
2023 2022 2023 2022
Net earnings (loss) – basic $ 19,792 $ 30,679 $ 142,522 $ (37,776 )
Effect of share options and other equity<br>    compensation plans — (94 ) 3,679 —
Net earnings (loss) – diluted $ 19,792 $ 30,585 $ 146,201 $ (37,776 )
Three Months Ended September 30, Nine Months Ended September 30,
(Stated in thousands) 2023 2022 2023 2022
Weighted average shares outstanding – basic 13,607 13,580 13,643 13,549
Effect of share options and other equity<br>    compensation plans 3 1,464 1,215 —
Weighted average shares outstanding – diluted 13,610 15,044 14,858 13,549

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, 2023 was approximately $921 million (December 31, 2022 – $965 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 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 11. BUSINESS COMBINATION

During the quarter ended September 30, 2023, Precision entered into an agreement to acquire all of the issued and outstanding common shares of CWC Energy Services Corp. (CWC), comprised of 947,909 Precision common shares, valued at approximately $88 million as of September 1, 2023 market close, $14 million in cash, plus the assumption of CWC's outstanding debt. The transaction is expected to be completed in the fourth quarter of 2023, subject to CWC shareholder and regulatory approvals and the satisfaction of other customary closing conditions.

| 14 |

| --- | | SHAREHOLDER INFORMATION<br><br> <br><br><br> <br>STOCK EXCHANGE LISTINGS<br><br> <br>Shares of Precision Drilling Corporation are listed<br> on the Toronto Stock Exchange under the trading symbol PD and on the New York Stock Exchange under the trading symbol PDS.<br><br> <br><br><br> <br>TRANSFER AGENT AND REGISTRAR<br><br> <br>Computershare Trust Company of Canada<br><br> <br>Calgary, Alberta<br><br> <br><br><br> <br>TRANSFER POINT<br><br> <br>Computershare Trust Company NA<br><br> <br>Canton, Massachusetts<br><br> <br><br><br> <br>Q3 2023 TRADING PROFILE<br><br> <br>Toronto (TSX: PD)<br><br> <br>High: $100.23<br><br> <br>Low: $61.81<br><br> <br>Close: $91.01<br><br> <br>Volume Traded: 5,167,035<br><br> <br><br><br> <br>New York (NYSE: PDS)<br><br> <br>High: US$73.82<br><br> <br>Low: US$46.29<br><br> <br>Close: US$67.12<br><br> <br>Volume Traded: 3,914,000<br><br> <br><br><br> <br>ACCOUNT QUESTIONS<br><br> <br>Precision’s Transfer Agent can help you<br> with a variety of shareholder related services, including:<br><br> <br>• change of address<br><br> <br>• lost unit certificates<br><br> <br>• transfer of shares to another person<br><br> <br>• estate settlement<br><br> <br><br><br> <br>Computershare Trust Company of Canada<br><br> <br>100 University Avenue<br><br> <br>9th Floor, North Tower<br><br> <br>Toronto, Ontario M5J 2Y1<br><br> <br>Canada<br><br> <br><br><br> <br>1-800-564-6253 (toll free in Canada and the United<br> States)<br><br> <br>1-514-982-7555 (international direct dialing)<br><br> <br>Email: service@computershare.com<br><br> <br><br><br> <br>ONLINE INFORMATION<br><br> <br>To receive news releases by email, or to view<br> this interim report online, please visit Precision’s website at www.precisiondrilling.com and refer to the Investor Relations section.<br> Additional information relating to Precision, including the Annual Information Form, Annual Report and Management Information Circular<br> has been filed with SEDAR and is available at www.sedar.com and on the EDGAR website www.sec.gov | CORPORATE INFORMATION<br><br> <br><br><br> <br>DIRECTORS<br><br> <br>Michael R. Culbert<br><br> <br>William T. Donovan<br><br> <br>Steven W. Krablin<br><br> <br>Susan M. MacKenzie<br><br> <br>Lori A. Lancaster<br><br> <br>Kevin O. Meyers<br><br> <br>Kevin A. Neveu<br><br> <br>David W. Williams<br><br> <br><br><br> <br>OFFICERS<br><br> <br>Kevin A. Neveu<br><br> <br>President and Chief Executive Officer<br><br> <br><br><br> <br>Veronica H. Foley<br><br> <br>Chief Legal & Compliance Officer<br><br> <br><br><br> <br>Carey T. Ford<br><br> <br>Chief Financial Officer<br><br> <br><br><br> <br>Shuja U. Goraya<br><br> <br>Chief Technology Officer<br><br> <br><br><br> <br>Darren J. Ruhr<br><br> <br>Chief Administrative Officer<br><br> <br><br><br> <br>Gene C. Stahl<br><br> <br>President, North American Drilling<br><br> <br><br><br> <br>AUDITORS<br><br> <br>KPMG LLP<br><br> <br>Calgary, Alberta<br><br> <br><br><br> <br>HEAD OFFICE<br><br> <br>Suite 800, 525 8th Avenue SW<br><br> <br>Calgary, Alberta, T2P 1G1<br><br> <br>Canada<br><br> <br>Telephone: 403-716-4500<br><br> <br>Facsimile: 403-264-0251<br><br> <br>Email: info@precisiondrilling.com<br><br> <br>www.precisiondrilling.com | | --- | --- |

15

Report a Problem

Category
Description
Email (optional, for follow-up)