Equibles

6-K

PRECISION DRILLING Corp (PDS)

6-K 2023-04-27 For: 2023-04-27
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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, April 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

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

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: April 27, 2023 PRECISION DRILLING CORPORATION
By: /s/Carey T Ford
Name: Carey<br>T Ford
Title: Chief Financial Officer
Exhibit DESCRIPTION
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31.1 Certification of Chief Executive Officer, Kevin Neveu, regarding the “Certification of InterimFilings” pursuant to Form 52-109F2.
31.2 Certification of Chief Financial Officer, Carey Ford, regarding the “Certification of InterimFilings” pursuant to Form 52-109F2.
99.1 Management’s Discussion and Analysis for the period ended March 31, 2023.
99.2 Consolidated Financial Statements for the period ended March 31, 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 March 31, 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.
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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.
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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.
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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
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(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance<br>that
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(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
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(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
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(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.
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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).
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5.2 ICFR – material weakness relating to design: N/A.
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5.3 Limitation on scope of design: N/A.
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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 January 1, 2023 and ended on March 31, 2023 that has<br>materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
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Date: April 27, 2023

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

Exhibit 31.2

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, Carey T. Ford, Senior Vice President and 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 March 31, 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.
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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.
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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.
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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
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(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance<br>that
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(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
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(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
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(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.
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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).
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5.2 ICFR – material weakness relating to design: N/A.
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5.3 Limitation on scope of design: N/A.
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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 January 1, 2023 and ended on March 31, 2023 that has<br>materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
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Date: April 27, 2023

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

Exhibit 99.1

PRECISION DRILLING CORPORATION

First Quarter Report for the three months ended March 31, 2023 and 2022

MANAGEMENT’S DISCUSSION AND ANALYSIS

This report contains “forward-lookinginformation and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking informationand statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information andStatements” later in this report. This report contains references to certain Financial Measures and Ratios, including Adjusted EBITDA(earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposalsand depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending and Working Capital. These terms do nothave standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not be comparable to similarmeasures used by other companies, see “Financial Measures and Ratios” later in this report.

Precision Drilling announces 2023 first quarter financial results:

· All key financial metrics including revenue,<br>daily operating margins^(1)^, Adjusted EBITDA^(2)^,<br>and net earnings exceeded results from the same period last year and the fourth quarter of 2022, supported by stronger drilling activity<br>and pricing increases in the U.S. and Canada.
· Precision’s North American drilling activity<br>grew 13% over the first quarter of 2022.
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· Revenue was $559 million, an increase of 59%<br>over the first quarter of 2022 and 9% sequentially.
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· Revenue per utilization day reached US$34,963<br>in the U.S. and $32,304 in Canada, while daily operating margins^(1)^ increased to US$14,692<br>in the U.S. and $13,558 in Canada as drilling rigs continued to reprice at higher day rates.
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· Precision continued to scale its Alpha™<br>and EverGreen™ product lines across its Super Triple rig fleet and grew revenue from these technological and environmental<br>offerings by over 60% from the first quarter of 2022.
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· Adjusted EBITDA^(2)^<br>increased to $203 million, significantly higher than the $37 million reported in the first quarter of 2022, and included a recovery from<br>share-based compensation plans of $12 million compared to an expense of $48 million in the comparative quarter.
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· Net earnings were $96 million or $7.02 per share<br>compared with a net loss of $44 million or a $3.25 loss per share in the first quarter of 2022.
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· Cash provided by operations was $28 million versus<br>cash used in operations of $65 million in the first quarter of 2022. Funds provided by operations^(2)^ was $160 million compared<br>to $30 million in the comparative quarter.
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· Precision remains committed to its 2023 debt<br>reduction target of $150 million and its longer-term targets of reducing debt by $500 million between 2022 and 2025 and achieving a normalized<br>Net Debt to Adjusted EBITDA^(2)^ ratio of less than 1.0 times by the end of 2025.
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· Returned $5 million of capital to shareholders<br>through share repurchases.
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· Ended the quarter with $42 million of cash and<br>approximately $540 million of available liquidity.
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· Completion and Production Services generated<br>revenue of $75 million and Adjusted EBITDA^(2)^ of $17 million, representing increases of<br>95% and 166%, respectively, from the first quarter of 2022. Precision successfully integrated its 2022 High Arctic acquisition into its<br>operations and is on track to achieve synergies of $5 million, on an annualized basis, in the second quarter.
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· Internationally, we have five rigs currently<br>active in the Middle East, increasing to eight by the middle of 2023 as we complete rig recertifications. These eight contracts represent<br>approximately $755 million in backlog revenue that stretches into 2028.
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· In April, Precision committed to a $5 million<br>equity investment in CleanDesign Income Corp. (CleanDesign), a key supplier of Precision’s EverGreen™ Battery Energy<br>Storage Systems (BESS). The investment provides Precision with key BESS and power management technologies and is aligned with the<br>Company’s overall emissions reduction strategy.
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· Precision decreased its 2023 capital spending<br>budget to $195 million as compared to its initial budget of $235 million. The decrease mainly reflects fewer drilling rig upgrades and<br>lower maintenance costs.
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(1) Revenue less operating costs per utilization day.
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(2) See “FINANCIAL MEASURES AND RATIOS.”
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SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

For the three months ended March 31,
(Stated in thousands of Canadian dollars, except per share amounts) 2023 2022 % Change
Revenue 558,607 351,339 59.0
Adjusted EBITDA^(1)^ 203,219 36,855 451.4
Net earnings (loss) 95,830 (43,844 ) (318.6 )
Cash provided by (used in) operations 28,356 (65,294 ) (143.4 )
Funds provided by operations^(1)^ 159,653 29,955 433.0
Cash used in investing activities 78,817 30,343 159.8
Capital spending by spend category^(1)^
Expansion and upgrade 16,345 9,615 70.0
Maintenance and infrastructure 34,450 26,787 28.6
Proceeds on sale (7,765 ) (2,847 ) 172.7
Net capital spending^(1)^ 43,030 33,555 28.2
Net earnings (loss) per share:
Basic 7.02 (3.25 ) (316.0 )
Diluted 5.57 (3.25 ) (271.4 )
(1) See “FINANCIAL MEASURES AND RATIOS.”
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Operating Highlights
2023 2022 % Change
Contract drilling rig fleet 225 227 (0.9 )
Drilling rig utilization days:
U.S. 5,382 4,590 17.3
Canada 6,168 5,653 9.1
International 433 540 (19.8 )
Revenue per utilization day:
U.S. (US) 34,963 24,299 43.9
Canada (Cdn) 32,304 24,263 33.1
International (US) 51,753 50,235 3.0
Operating costs per utilization day:
U.S. (US) 20,271 18,370 10.3
Canada (Cdn) 18,746 15,398 21.7
Service rig fleet 118 123 (4.1 )
Service rig operating hours 58,341 38,265 52.5

All values are in US Dollars.

Financial Position

(Stated in thousands of Canadian dollars, except ratios) March 31, 2023 December 31, 2022
Working capital^(1)^ 248,848 60,641
Cash 41,619 21,587
Long-term debt 1,161,626 1,085,970
Total long-term financial liabilities 1,238,741 1,206,619
Total assets 2,891,399 2,876,123
Long-term debt to long-term debt plus equity ratio ^(1)^ 0.46 0.47
(1) See “FINANCIAL MEASURES AND RATIOS.”
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Summary for the three months ended March 31, 2023:

· Revenue of $559 million was 59% higher than in<br>2022 and the result of increased North American drilling and service activity and day rates, partially offset by lower international activity.<br>Drilling rig utilization days increased 17% in the U.S. and 9% in Canada, and well service activity increased 53% as compared with the<br>first quarter of 2022.
· Adjusted EBITDA was $203 million, $166 million<br>higher than 2022, mainly due to increased activity, higher day rates and lower share-based compensation. Share-based compensation recovery<br>was $12 million, approximately $60 million lower than in 2022 as a result of our lower share price. Please refer to “Other Items”<br>later in this report for additional information on share-based compensation charges.
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· Adjusted EBITDA as a percentage of revenue was<br>36% as compared with 10% in 2022.
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· General and administrative expenses were $16<br>million, $40 million lower than in 2022 due to lower share-based compensation charges.
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· Net finance charges were $23 million, an increase<br>of $2 million from 2022 due to higher variable interest rates and the impact of the weakening of the Canadian dollar on our U.S. dollar<br>denominated interest.
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· Our U.S. revenue per utilization day was US$34,963<br>compared with US$24,299 in 2022. The increase was primarily the result of higher fleet average day rates, partially offset by lower turnkey<br>revenue. We recognized revenue from turnkey projects of US$7 million compared with US$12 million in 2022. Revenue per utilization day,<br>excluding the impact of turnkey, was US$33,721, compared to US$21,765 in the previous quarter, an increase of $11,956 or 55%. Revenue<br>per utilization day, excluding turnkey revenue, increased US$3,169 from the fourth quarter of 2022.
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· Our U.S. operating costs per utilization day<br>increased to US$20,271, compared with US$18,370 in 2022 due to higher repairs and maintenance costs and field wages, partially offset<br>by lower turnkey activity. Operating costs per utilization day, excluding turnkey, were US$19,421 compared with US$16,095 in the previous<br>quarter. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day increased US$766.
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· In Canada, revenue per utilization day was $32,304<br>compared with $24,263 in 2022. The increase was a result of higher day rates and increased labor and cost recoveries. Sequentially, revenue<br>per utilization day increased $2,418.
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· Our Canadian operating costs per utilization<br>day increased to $18,746, compared with $15,398 in 2022, due to higher field wages and repairs and maintenance expenses. Sequentially,<br>our daily operating costs increased $1,208.
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· Completion and Production Services revenue and Adjusted EBITDA were $75 million<br>and $17 million, respectively, compared with $38 million and $7 million in 2022.
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· We realized US$22 million of international contract<br>drilling revenue compared with US$27 million in 2022.
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· Cash provided by operations was $28 million compared<br>with cash used in operations of $65 million in 2022. We generated $160 million of funds provided by operations compared with $30 million<br>in 2022. Our increased activity, revenue efficiency, operational leverage and day rates contributed to higher cash generation in the current<br>quarter.
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· Capital expenditures were $51 million compared<br>with $36 million in 2022. Capital spending by spend category (see “FINANCIAL MEASURES AND RATIOS”) included $16 million for<br>expansion and upgrades and $35 million for the maintenance of existing assets and infrastructure.
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· We ended the quarter with $42 million of cash<br>and approximately $540 million of available liquidity.
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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 first quarter are as follows:

1. Deliver High Performance, High Value service through operational excellence.
· Grew our average active rig count by 17% in the<br>U.S. and 9% in Canada as compared with the same period last year.
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· Increased service rig operating hours 53% over<br>the first quarter of 2022. With the successful acquisition of High Arctic’s well servicing business in July 2022, Precision is now<br>the leading provider of high-quality and reliable services in Canada.
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· Reinvested $51 million into our equipment and<br>infrastructure and expect a total investment of $195 million in 2023.
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· Subsequent to quarter end, we committed to a<br>$5 million equity investment in CleanDesign, a key supplier of our EverGreen^TM^ BESS. The investment provides Precision with<br>key BESS and power management technologies and is aligned with the Company’s overall ESG strategy.
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· Realized daily operating margins (revenue less<br>operating costs per utilization day) of US$14,692 in the U.S. and $13,558 in Canada. Sequentially, our daily operating margins have increased<br>in the U.S. and Canada 23% and 10%, respectively.
· Grew Alpha™ and EverGreen™ revenue<br>by over 60% compared with the first quarter of 2022.
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· Ended the quarter with 73 of our AC SuperTriple rigs equipped with Alpha™, representing a 46% increase over the same quarter last year.
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· Continued to scale our EverGreen™ product<br>line, adding two EverGreen™ BESS, three EverGreen™ Integrated Power and Emissions Monitoring Systems and 11 high mast LED<br>lighting systems to our fleet.
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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 of below 1.0 times by the end of 2025.
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· Returned $5 million of capital to shareholders<br>by repurchasing and cancelling 67,073 common shares.
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· Cash provided by operations during the quarter<br>was $28 million, $131 million lower than in the fourth quarter of 2022 due to the build-up of working capital from seasonal cash demands<br>of our business, annual compensation payments and $39 million of cash interest payments.
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· Expect to generate positive cash flow from operations<br>in the second quarter and repay the majority of the $78 million drawn on our Senior Credit Facility in the first quarter.
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· Remain committed to reducing debt by at least<br>$150 million in 2023, with the majority of this expected to occur in the second half of the year.
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OUTLOOK

Over the past few years, our customer base has shifted priorities from growth to shareholder returns. Similarly, the land drilling sector is demonstrating strict capital discipline, where despite strong customer demand and high utilization of Super Specification (Super-Spec) rigs, drilling contractors are funding only the most attractive capital investment opportunities and dismissing discussions of new rig builds. These dynamics are producing a more sustainable and predictable operating environment and ultimately generating better investor returns.

Energy industry fundamentals continue to support drilling activity for oil and natural gas despite broad economic concerns and geopolitical instability. Oil prices are supported by demand growth reemerging in China, OPEC holding steady on production quotas, and years of underinvestment and capital discipline by producers, which are limiting supply growth. We therefore expect drilling activity to improve in oil basins in the second half of the year as customers seek to generate appropriate investment returns, maintain production levels and replenish inventories. Natural gas is demonstrating short-term price weaknesses; however, this lower-carbon energy source is becoming increasingly favorable as countries around the world stress the importance of sustainability, decarbonization and energy security. With demand for Liquified Natural Gas (LNG) exports growing and the next wave of North America LNG projects expected to begin coming online in 2025 (including LNG Canada), we anticipate a sustained period of elevated natural gas drilling activity.

In Canada, industry activity is supported by imminent hydrocarbon export capacity increases with the Trans Mountain oil pipeline and the Coastal GasLink pipeline, each expected to begin operations within the next 12 months. Northwestern Alberta and northeastern British Columbia natural gas developments are prime beneficiaries of the LNG Canada project and the January 2023 agreement between the British Columbia government and the Blueberry River First Nation has facilitated a significant increase in 2023 drilling license approvals, which should lead to more drilling activity in the region. Large pad drilling programs are ideally suited for Super Triple drilling rigs, resulting in strong customer interest for these rigs for the next several years. On the oil side, we expect activity to remain strong as Canadian producers are benefitting from a favorable U.S. exchange rate and a reduced heavy oil differential. Precision’s Super Single rigs are well suited for long-term conventional heavy oil development in the oil sands and Clearwater formation. Looking at the second half of the year, we expect our Super Triple fleet to be fully utilized with demand exceeding supply and our Super Single pad capable rigs to be highly utilized. Accordingly, the tightening of available Super-Spec rigs is expected to drive higher day rates, increase demand for term contracts, and could necessitate customer-funded rig upgrades or rig moves from the U.S.

In the U.S., drilling activity has been increasing since mid-2020 but recently declined due to lower natural gas prices. We expect demand to improve in the second half of the year as customers continue to high-grade rigs to the latest pad drilling, AlphaAutomation^TM^ equipped rigs and modestly increase rig counts in oily basins to maintain production.

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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 nine EverGreen™ BESS deployed in the field and have commitments for two additional deployments in the second quarter as customer interest continues to rise for this low emission power source. We recently expanded our partnership with CleanDesign, a key supplier of EverGreen^TM^ BESS, through a $5 million equity investment commitment. This partnership will ensure we can meet the expected demand for BESS and is aligned with our overall emissions reduction strategy.

Internationally, we currently have five rigs working on term contracts, two in Kuwait and three in the Kingdom of Saudi Arabia, increasing to eight by the middle of the year following successful contracting in 2022. We continue to bid our remaining idle rigs within the region and remain optimistic in our ability to secure rig reactivations.

The outlook for our Precision Well Servicing business remains positive with strong customer demand supporting maintenance and completion activity. We have successfully integrated High Arctic’s well servicing assets and associated rental business that we acquired in July 2022. By leveraging our existing platform and continuing our strict focus on cost control, we have realized annual run-rate cost synergies of approximately $4 million and expect to achieve our $5 million target in the second quarter.

Commodity Prices

First quarter average West Texas Intermediate and Western Canadian Select oil prices decreased 19% and 29%, respectively, from 2022. Average Henry Hub and AECO natural gas prices declined 39% and 32%, respectively from 2022.

Year ended December 31,
2023 2022 2022
Average oil and natural gas prices
Oil
West Texas Intermediate (per barrel) (US) 76.11 94.29 94.23
Western Canadian Select (per barrel) (US) 56.31 79.77 78.15
Natural gas
United States
Henry Hub (per MMBtu) (US) 2.77 4.57 6.51
Canada
AECO (per MMBtu) (CDN) 3.25 4.77 5.43

All values are in US Dollars.

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at April 25, 2023. For those quarters ending after March 31, 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 April 25, 2023:
U.S. 27 29 31 35 40 37 26 18
Canada 6 8 10 16 19 20 18 15
International 6 6 6 6 4 6 8 8
Total 39 43 47 57 63 63 52 41

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 April 25, 2023.

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| --- | | | Average for the year ended | | | | --- | --- | --- | --- | | | | 2022 | 2023 | | Average rigs under term contract <br>as of April 25, 2023: | | | | | U.S. | | 31 | 30 | | Canada | | 10 | 18 | | International | | 6 | 7 | | Total | | 47 | 55 |

In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. 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 under long term contract beginning in the second half 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 2022 Average for the quarter ended 2023
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31
Average Precision active rig count:
U.S. 51 55 57 60 60
Canada 63 37 59 66 69
International 6 6 6 6 5
Total 120 98 122 132 134

According to industry sources, as at April 25, 2023, the U.S. active land drilling rig count has increased 8% from the same point last year while the Canadian active land drilling rig count has increased 4%. 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 80% for the U.S. and 59% 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. We reduced our 2023 capital spending budget from $235 million to $195 million in response to lower expected capital upgrades and maintenance capital. Capital spending by spend category includes $146 million for sustaining, infrastructure and intangibles and $49 million for expansion and upgrades. We expect that the $195 million will be split as follows: $183 million in the Contract Drilling Services segment, $11 million in the Completion and Production Services segment, and $1 million in the Corporate segment. At March 31, 2023, Precision had capital commitments of approximately $199 million with payments expected through 2026.

We remain committed to our debt reduction plans and in 2023 expect to reduce debt by at least $150 million and allocate 10% to 20% of free cash flow before debt repayments for share repurchases. Our long-term debt reduction target from the beginning of 2022 through to the end of 2025 is $500 million and target Net Debt to Adjusted EBITDA leverage ratio of below 1.0 times, while continuing to allocate 10% to 20% of free cash flow before debt principal payments to shareholders.

On April 11, 2023, S&P Global Ratings raised our issuer credit rating and rating on our Unsecured Senior Notes to ‘B+’ from ‘B’.

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.

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| --- | | | For the three months ended March 31, | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | (Stated in thousands of Canadian dollars) | | 2023 | | 2022 | | % Change | | | Revenue: | | | | | | | | | Contract Drilling Services | | 486,076 | | 314,145 | | 54.7 | | | Completion and Production Services | | 74,523 | | 38,238 | | 94.9 | | | Inter-segment eliminations | | (1,992 | ) | (1,044 | ) | 90.8 | | | | | 558,607 | | 351,339 | | 59.0 | | | Adjusted EBITDA:^(1)^ | | | | | | | | | Contract Drilling Services | | 189,123 | | 71,174 | | 165.7 | | | Completion and Production Services | | 17,406 | | 6,539 | | 166.2 | | | Corporate and Other | | (3,310 | ) | (40,858 | ) | (91.9 | ) | | | | 203,219 | | 36,855 | | 451.4 | | | (1) | See “FINANCIAL MEASURES AND RATIOS.” | | --- | --- |

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

For the three months ended March 31,
(Stated in thousands of Canadian dollars, except where noted) 2023 2022 % Change
Revenue 486,076 314,145 54.7
Expenses:
Operating 287,067 230,051 24.8
General and administrative 9,886 12,920 (23.5 )
Adjusted EBITDA^(1)^ 189,123 71,174 165.7
Adjusted EBITDA as a percentage of revenue^(1)^ 38.9 % 22.7 %
(1) See “FINANCIAL 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
(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
(1) Canadian operations only.
--- ---
(2) Baker Hughes rig counts.
--- ---

Revenue from Contract Drilling Services was $486 million, 55% higher than 2022, while Adjusted EBITDA increased 166% to $189 million. The increase in revenue and Adjusted EBITDA was primarily due to higher North American activity and day rates, partially offset by lower international activity.

Drilling rig utilization days (drilling days plus move days) in the U.S. were 5,382, 17% higher than 2022. Drilling rig utilization days in Canada were 6,168, 9% higher than 2022. The increase in utilization days in both the U.S. and Canada was consistent with higher industry activity. Drilling rig utilization days in our international business were 433, a decrease of 20% from the comparable quarter, as drilling operations were paused while our Kuwait rigs began the recertification process in accordance with the 5-year contracts signed in 2022.

Revenue per utilization day in the U.S. increased 44% from the comparable quarter and was primarily the result of higher fleet average day rates, partially offset by lower turnkey revenue. We recognized revenue from turnkey projects of US$7 million compared with US$12 million in 2022. Drilling rig revenue per utilization day in Canada increased 33% due to higher day rates and increased labor and cost recoveries. Our international revenue per utilization day for the quarter was 3% higher than 2022 primarily due to the efficiency of rig moves, partially offset by the impact of rig recertifications.

In the U.S., 60% of utilization days were generated from rigs under term contract as compared with 49% in 2022. In Canada, 27% of our utilization days were generated from rigs under term contract, compared with 10% in 2022.

U.S. operating costs per utilization day increased 10% as compared with 2022 and was primarily due to higher repairs and maintenance costs and field wages, partially offset by lower turnkey activity. U.S. operating costs per utilization day, excluding turnkey, was US$19,421 compared with US$16,095 the prior year. Our Canadian operating costs per utilization day increased 22% as compared with 2022 and was due to higher field wages and repairs and maintenance expenses.

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Our general and administrative expenses decreased $3 million as compared with 2022 and was primarily the result of lower share-based compensation charges due to our lower share price.

SEGMENT REVIEW OF COMPLETION AND PRODUCTIONSERVICES

For the three months ended March 31,
(Stated in thousands of Canadian dollars, except where noted) 2023 2022 % Change
Revenue 74,523 38,238 94.9
Expenses:
Operating 54,792 29,967 82.8
General and administrative 2,325 1,732 34.2
Adjusted EBITDA^(1)^ 17,406 6,539 166.2
Adjusted EBITDA as a percentage of revenue^(1)^ 23.4 % 17.1 %
Well servicing statistics:
Number of service rigs (end of period) 118 123 (4.1 )
Service rig operating hours 58,341 38,265 52.5
Service rig operating hour utilization 55 % 46 %
(1) See “FINANCIAL MEASURES AND RATIOS.”
--- ---

Completion and Production Services revenue increased to $75 million as compared with $38 million in 2022. The higher revenue was primarily due to increased average service rates and activity, as our service rig operating hours increased 53% from 2022.

Completion and Production Services generated 5% of its revenue from U.S. operations compared with 11% in the comparative period.

Operating costs as a percentage of revenue were 74% compared with 78% in 2022. As compared to 2022, our first quarter general and administrative expenses increased 34%. The higher expense for the quarter is primarily due to incremental costs resulting from our well servicing acquisition in the third quarter of 2022.

Our first quarter Adjusted EBITDA increased to $17 million, as compared with $7 million in 2022, primarily due to increased average service rates and activity.

During the quarter, we made our remaining payment of $28 million to complete our acquisition of High Arctic’s well servicing business and associated rental assets.

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 $3 million as compared with $41 million in the first quarter of 2022. Our current quarter Adjusted EBITDA was positively impacted by decreased share-based compensation costs due to our lower share price.

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 amounts expensed under these plans during the reporting periods are as follows:

For the three months ended March 31,
(Stated in thousands of Canadian dollars) 2023 2022
Cash settled share-based incentive plans (12,095 ) 47,211
Equity settled share-based incentive plans 480 427
Total share-based incentive compensation plan expense (recovery) (11,615 ) 47,638
Allocated:
Operating (1,883 ) 10,920
General and Administrative (9,732 ) 36,718
(11,615 ) 47,638 
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Cash settled share-based compensation recovery for the quarter was $12 million as compared with an expense of $47 million in 2022. Our 2023 recovery was primarily due to a 33% decrease in our share price from the start of the year, whereas the expense in 2022 reflected our share price increasing by approximately 100% over the comparable period.

As at March 31, 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

Finance charges were $23 million as compared with $21 million in 2022. Our increased finance charges were primarily due to higher variable interest rates and the impact of the weakening of the Canadian dollar on our U.S. dollar denominated interest. Interest charges on our U.S. denominated long-term debt were US$15 million ($21 million) as compared with US$15 million ($19 million) in 2022.

Income Tax

Income tax expense for the quarter was $18 million as compared with $1 million in 2022. During the first quarter, we did not recognize deferred tax assets on certain Canadian and international operating losses.

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$500 million^(1)^ (extendible, revolving<br><br> <br>term credit facility with US$300 million accordion feature) US$102 million drawn and US$56 million in outstanding letters of credit General corporate purposes June 18, 2025^(1)^
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 $22 million in<br><br> <br>outstanding letters of credit Letters of credit and general<br><br> <br>corporate purposes
US$15 million Undrawn Short-term working capital<br><br> <br>requirements
Demand letter of credit facility (secured)
US$40 million Undrawn, except US$21 million in<br><br> <br>outstanding letters of credit Letters of credit
Unsecured senior notes (unsecured)
US$348 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
(1) US$53 million expires on November 21, 2023.
--- ---

At March 31, 2022, we had $1,178 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%.

On April 11, 2023, S&P Global Ratings raised our issuer credit rating and rating on our Unsecured Senior Notes to ‘B+’ from ‘B’.

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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.

On June 18, 2021, we agreed with the lenders of our Senior Credit Facility to extend the facility’s maturity date and extend and amend certain financial covenants during the Covenant Relief Period. The Covenant Relief Period ended on September 30, 2022. The maturity date of the Senior Credit Facility was extended to June 18, 2025; however, US$53 million of the US$500 million will expire on November 21, 2023. 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.

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

At March 31, 2023, we were in compliance with the covenants of our Senior Credit Facility and Real Estate Credit Facilities.

Covenant At March 31, 2023
Senior Credit Facility
Consolidated senior debt to consolidated covenant EBITDA^(1)^ < 2.50 0.36
Consolidated covenant EBITDA to consolidated interest expense > 2.50 5.41
Real Estate Credit Facilities
Consolidated covenant EBITDA to consolidated interest expense > 2.50 5.41

(1) For purposes of calculating the leverage 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<br> March 31, At December 31,
2023 2022 2022
Canada-U.S. foreign exchange rates
Average 1.35 1.27 —
Closing 1.35 1.25 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).

Average shares outstanding

The following tables reconcile net earnings (loss) and the weighted average shares outstanding used in computing basic and diluted net earnings (loss) per share:

For the three months ended March 31,
2023 2022
Net earnings (loss) - basic 95,830 (43,844 )
Effect of share options and other equity compensation plans (13,244 ) —
Net earnings (loss) - diluted 82,586 (43,844 ) 
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| --- | | | For the three months ended March 31, | | | | --- | --- | --- | --- | | (Stated in thousands) | | 2023 | 2022 | | Weighted average shares outstanding – basic | | 13,648 | 13,479 | | Effect of share options and other equity compensation plans | | 1,191 | — | | Weighted average shares outstanding – diluted | | 14,839 | 13,479 |

QUARTERLY FINANCIAL SUMMARY

(Stated in thousands of Canadian dollars, except per share amounts) 2022 2023
Quarters ended June 30 September 30 December 31 March 31
Revenue 326,016 429,335 510,504 558,607
Adjusted EBITDA^(1)^ 64,099 119,561 91,090 203,219
Net earnings (loss) (24,611 ) 30,679 3,483 95,830
Net earnings (loss) per basic share (1.81 ) 2.26 0.27 7.02
Net earnings (loss) per diluted share (1.81 ) 2.03 0.27 5.57
Funds provided by operations^(1)^ 60,373 81,327 111,339 159,653
Cash provided by operations 135,174 8,142 159,082 28,356
(Stated in thousands of Canadian dollars, except per share amounts) 2021 2022
--- --- --- --- --- --- --- --- --- --- ---
Quarters ended June 30 September 30 December 31 March 31
Revenue 201,359 253,813 295,202 351,339
Adjusted EBITDA^(1)^ 28,944 45,408 63,881 36,855
Net loss (75,912 ) (38,032 ) (27,336 ) (43,844 )
Net loss per basic share (5.71 ) (2.86 ) (2.05 ) (3.25 )
Net loss per diluted share (5.71 ) (2.86 ) (2.05 ) (3.25 )
Funds provided by operations^(1)^ 12,607 33,525 62,681 29,955
Cash provided by (used in) operations 42,219 21,871 59,713 (65,294 )
(1) See “FINANCIAL MEASURES AND RATIOS.”
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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 March 31, 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 March 31, 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 March 31, 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.

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FINANCIAL MEASURES AND RATIOS

Non-GAAP Financial Measures
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<br> taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization),<br> as reported in our Condensed Interim Consolidated Statements of Net Loss and our reportable operating segment disclosures, is a useful<br> measure, because it gives an indication of the results from our principal business activities prior to consideration of how our activities<br> are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.<br><br> <br>The most directly comparable financial measure<br> is net earnings (loss).
For the three months ended March 31,
(Stated in thousands of Canadian dollars) 2023 2022
Adjusted EBITDA by segment:
Contract Drilling Services 189,123 71,174
Completion and Production Services 17,406 6,539
Corporate and Other (3,310 ) (40,858 )
Adjusted EBITDA 203,219 36,855
Depreciation and amortization 71,543 68,457
Gain on asset disposals (9,276 ) (3,114 )
Foreign exchange (483 ) (518 )
Finance charges 22,920 20,730
Loss (gain) on investments and other assets 4,230 (5,569 )
Incomes taxes 18,455 713
Net earnings (loss) 95,830 (43,844 )
Funds Provided by (Used in) Operations We believe funds provided by (used in) operations,<br> as reported in our Condensed Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the<br> funds our principal business activities generate prior to consideration of working capital changes, which is primarily made up of highly<br> liquid balances.<br><br> <br><br><br> <br>The most directly comparable financial measure<br> is cash provided by (used in) operations.
Net Capital Spending We believe net capital spending is a useful measure<br> as it provides an indication of our primary investment activities.<br><br> <br><br><br> <br>The most directly comparable financial measure<br> is cash provided by (used in) investing activities.<br><br> <br><br><br> <br>Net capital spending is calculated as follows:
For the three months ended March 31,
(Stated in thousands of Canadian dollars) 2023 2022
Capital spending by spend category
Expansion and upgrade 16,345 9,615
Maintenance and infrastructure 34,450 26,787
50,795 36,402
Proceeds on sale of property, plant and equipment (7,765 ) (2,847 )
Net capital spending 43,030 33,555
Business acquisitions 28,000 —
Purchase of investments and other assets 55 —
Changes in non-cash working capital balances 7,732 (3,212 )
Cash used in investing activities 78,817 30,343
Working Capital We define working capital as current assets less<br> current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.<br><br> <br><br><br> <br>Working capital is calculated as follows: 
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| --- | | | At December 31, | At December 31, | | --- | --- | --- | | (Stated in thousands of Canadian dollars) | 2023 | 2022 | | Current assets | 515,439 | 470,670 | | Current liabilities | 266,591 | 410,029 | | Working capital | 248,848 | 60,641 |

Non-GAAP Ratios
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 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 to 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 to 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. 
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CAUTIONARYSTATEMENT 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<br> strategic priorities for 2023;
· our<br> capital expenditures, free cash flow allocation and debt reduction plan for 2023;
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· anticipated<br> activity levels, demand for our drilling rigs, day rates and margins in 2023;
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· the<br> average number of term contracts in place for 2023;
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· customer<br> adoption of Alpha^TM^ technologies and EverGreen^TM^ suite of environmental<br> solutions;
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· anticipated<br> timing and amount of costs savings from acquired well servicing and rental assets;
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· potential<br> commercial opportunities and rig contract renewals; and
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· our<br> future debt reduction plans.
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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<br> ability to react to customer spending plans as a result of changes in oil and natural gas<br> prices;
· the<br> status of current negotiations with our customers and vendors;
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· customer<br> focus on safety performance;
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· existing<br> term contracts are neither renewed nor terminated prematurely;
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· our<br> ability to deliver rigs to customers on a timely basis;
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· the<br> impact of an increase/decrease in capital spending; and
--- ---
· the<br> general stability of the economic and political environments in the jurisdictions where we<br> operate.
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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<br> in the price and demand for oil and natural gas;
· fluctuations<br> in the level of oil and natural gas exploration and development activities;
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· fluctuations<br> in the demand for contract drilling, well servicing and ancillary oilfield services;
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· our<br> customers’ inability to obtain adequate credit or financing to support their drilling<br> and production activity;
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· the<br> success of vaccinations for COVID-19 worldwide;
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· changes<br> in drilling and well servicing technology, which could reduce demand for certain rigs or<br> put us at a competitive advantage;
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· shortages,<br> delays and interruptions in the delivery of equipment supplies and other key inputs;
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· liquidity<br> of the capital markets to fund customer drilling programs;
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· availability<br> of cash flow, debt and equity sources to fund our capital and operating requirements, as<br> needed;
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· the<br> impact of weather and seasonal conditions on operations and facilities;
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· competitive<br> operating risks inherent in contract drilling, well servicing and ancillary oilfield services;
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· ability<br> to improve our rig technology to improve drilling efficiency;
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· general<br> economic, market or business conditions;
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· the<br> availability of qualified personnel and management;
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· a<br> decline in our safety performance which could result in lower demand for our services;
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· changes<br> 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<br> gas emissions, which could have an adverse impact on the demand for oil and natural gas;
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· terrorism,<br> social, civil and political unrest in the foreign jurisdictions where we operate;
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· fluctuations<br> in foreign exchange, interest rates and tax rates; and
--- ---
· other<br> unforeseen conditions which could impact the use of services supplied by Precision and Precision’s<br> ability to respond to such conditions.
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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.

14

Exhibit 99.2

CONDENSED INTERIM CONSOLIDATED STATEMENTS OFFINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars) March 31, 2023 December 31, 2022
ASSETS
Current assets:
Cash $ 41,619 $ 21,587
Accounts receivable 437,258 413,925
Inventory 36,562 35,158
Total current assets 515,439 470,670
Non-current assets:
Income tax recoverable 695 1,602
Deferred tax assets 454 455
Right-of-use assets 59,493 60,032
Property, plant and equipment 2,280,492 2,303,338
Intangibles 18,550 19,575
Investments and other assets 16,276 20,451
Total non-current assets 2,375,960 2,405,453
Total assets $ 2,891,399 $ 2,876,123
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 248,140 $ 392,053
Income taxes payable 3,379 2,991
Current portion of lease obligations 12,787 12,698
Current portion of long-term debt (Note 5) 2,285 2,287
Total current liabilities 266,591 410,029
Non-current liabilities:
Share-based compensation (Note 7) 17,154 60,133
Provisions and other 7,518 7,538
Lease obligations 52,443 52,978
Long-term debt (Note 5) 1,161,626 1,085,970
Deferred tax liabilities 46,482 28,946
Total non-current liabilities 1,285,223 1,235,565
Shareholders’ equity:
Shareholders’ capital (Note 8) 2,313,746 2,299,533
Contributed surplus 73,035 72,555
Deficit (1,205,443 ) (1,301,273 )
Accumulated other comprehensive income 158,247 159,714
Total shareholders’ equity 1,339,585 1,230,529
Total liabilities and shareholders’ equity $ 2,891,399 $ 2,876,123

See accompanying notes to condensed interimconsolidated financial statements.

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OFNET EARNINGS (LOSS) (UNAUDITED)

Three Months Ended March 31,
(Stated in thousands of Canadian dollars, except per share amounts) 2023 2022
Revenue (Note 3) $ 558,607 $ 351,339
Expenses:
Operating 339,867 258,974
General and administrative 15,521 55,510
Earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign<br> exchange, gain on asset disposals and depreciation and amortization 203,219 36,855
Depreciation and amortization 71,543 68,457
Gain on asset disposals (9,276 ) (3,114 )
Foreign exchange (483 ) (518 )
Finance charges (Note 6) 22,920 20,730
Loss (gain) on investments and other assets 4,230 (5,569 )
Earnings (loss) before income taxes 114,285 (43,131 )
Income taxes:
Current 841 970
Deferred 17,614 (257 )
18,455 713
Net earnings (loss) $ 95,830 $ (43,844 )
Net earnings (loss) per share: (Note 9)
Basic $ 7.02 $ (3.25 )
Diluted $ 5.57 $ (3.25 )

See accompanying notes to condensed interimconsolidated financial statements.

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

Three Months Ended March 31,
(Stated in thousands of Canadian dollars) 2023 2022
Net earnings (loss) $ 95,830 $ (43,844 )
Unrealized loss on translation of assets and liabilities of operations denominated in foreign currency (4,140 ) (16,971 )
Foreign exchange gain on net investment hedge with U.S. denominated debt 2,673 12,768
Comprehensive income (loss) $ 94,363 $ (48,047 )

See accompanying notes to condensed interim consolidated financialstatements.

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OFCASH FLOWS (UNAUDITED)

Three Months Ended March 31,
(Stated in thousands of Canadian dollars) 2023 2022
Cash provided by (used in):
Operations:
Net earnings (loss) $ 95,830 $ (43,844 )
Adjustments for:
Long-term compensation plans (4,117 ) 31,212
Depreciation and amortization 71,543 68,457
Gain on asset disposals (9,276 ) (3,114 )
Foreign exchange (502 ) (271 )
Finance charges 22,920 20,730
Income taxes 18,455 713
Loss (gain) on investments and other assets 4,230 (5,569 )
Income taxes paid (171 ) (227 )
Interest paid (39,375 ) (38,161 )
Interest received 116 29
Funds provided by operations 159,653 29,955
Changes in non-cash working capital balances (131,297 ) (95,249 )
28,356 (65,294 )
Investments:
Purchase of property, plant and equipment (50,795 ) (36,402 )
Proceeds on sale of property, plant and equipment 7,765 2,847
Business acquisitions (28,000 ) —
Purchase of investments and other assets (55 ) —
Changes in non-cash working capital balances (7,732 ) 3,212
(78,817 ) (30,343 )
Financing:
Issuance of long-term debt 139,049 88,124
Repayments of long-term debt (61,344 ) (8,190 )
Repurchase of share capital (4,993 ) —
Issuance of common shares on the exercise of options — 1,396
Lease payments (1,961 ) (1,567 )
70,751 79,763
Effect of exchange rate changes on cash (258 ) (612 )
Increase (decrease) in cash 20,032 (16,486 )
Cash, beginning of period 21,587 40,588
Cash, end of period $ 41,619 $ 24,102

See accompanying notes to condensed interimconsolidated financial statements.

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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 — — — 95,830 95,830
Other comprehensive loss for the period — — (1,467 ) — (1,467 )
Settlement of Executive Performance and Restricted Share Units 19,206 — — — 19,206
Share repurchases (4,993 ) — — — (4,993 )
Share-based compensation expense — 480 — — 480
Balance at March 31, 2023 $ 2,313,746 $ 73,035 $ 158,247 $ (1,205,443 ) $ 1,339,585
(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 — — — (43,844 ) (43,844 )
Other comprehensive loss for the period — — (4,203 ) — (4,203 )
Share options exercised 1,970 (574 ) — — 1,396
Settlement of Executive Performance Share Units 14,083 — — — 14,083
Share-based compensation reclassification — (219 ) — — (219 )
Share-based compensation expense — 646 — — 646
Balance at March 31, 2022 $ 2,297,497 $ 76,164 $ 130,577 $ (1,310,824 ) $ 1,193,414

See accompanying notes to condensed interimconsolidated financial statements.

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| --- |

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIALSTATEMENTS (UNAUDITED)

(Tabular amounts are stated in thousands ofCanadian 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 consistent with those used in the preparation of the Corporation’s consolidated annual financial statements for the year ended December 31, 2022.

These condensed interim consolidated financial statements were approved by the Board of Directors on April 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.

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.

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| --- | | Three Months Ended March 31, 2023 | | Contract<br> <br>Drilling<br> <br>Services | **** | Completion<br> <br>and<br> <br>Production<br> <br>Services | **** | Corporate<br> <br>and Other | | Inter-<br> <br>Segment<br> <br>Eliminations | **** | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | United States | $ | 254,138 | $ | 4,077 | $ | — | $ | (14 | ) | $ | 258,201 | | Canada | | 201,678 | | 70,446 | | — | | (1,978 | ) | | 270,146 | | International | | 30,260 | | — | | — | | — | | | 30,260 | | | $ | 486,076 | $ | 74,523 | $ | — | $ | (1,992 | ) | $ | 558,607 | | Day rate/hourly services | $ | 473,665 | $ | 74,523 | $ | — | $ | (14 | ) | $ | 548,174 | | Shortfall payments/idle but contracted | | 883 | | — | | — | | — | | | 883 | | Turnkey drilling services | | 8,988 | | — | | — | | — | | | 8,988 | | Other | | 2,540 | | — | | — | | (1,978 | ) | | 562 | | | $ | 486,076 | $ | 74,523 | $ | — | $ | (1,992 | ) | $ | 558,607 |

Three Months Ended March 31, 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 $ 141,265 $ 4,038 $ — $ (1 ) $ 145,302
Canada 138,517 34,200 — (1,043 ) 171,674
International 34,363 — — — 34,363
$ 314,145 $ 38,238 $ — $ (1,044 ) $ 351,339
Day rate/hourly services $ 298,050 $ 38,238 $ — $ (193 ) $ 336,095
Turnkey drilling services 14,738 — — — 14,738
Other 1,357 — — (851 ) 506
$ 314,145 $ 38,238 $ — $ (1,044 ) $ 351,339
(b) Seasonality
--- ---

Precision has operations that are carried on in Canada which represent approximately 48% (2022 - 49%) of consolidated revenue for the three months ended March 31, 2023 and 38% (2022

  • 37%) of consolidated total assets as at March 31, 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.

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.

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| --- | | Three Months Ended March 31, 2023 | **** | Contract<br> <br>Drilling<br> <br>Services | **** | | Completion<br> <br>and<br> <br>Production<br> <br>Services | **** | **** | Corporate<br> <br>and Other | **** | | Inter-<br> <br>Segment<br> <br>Eliminations | **** | | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | $ | 486,076 | | $ | 74,523 | | $ | — | | $ | (1,992 | ) | $ | 558,607 | | | Earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization | | 189,123 | | | 17,406 | | | (3,310 | ) | | — | | | 203,219 | | | Depreciation and amortization | | 65,555 | | | 3,731 | | | 2,257 | | | — | | | 71,543 | | | Gain on asset disposals | | (8,580 | ) | | (566 | ) | | (130 | ) | | — | | | (9,276 | ) | | Total assets | | 2,570,030 | | | 187,913 | | | 133,456 | | | — | | | 2,891,399 | | | Capital expenditures | | 48,824 | | | 1,783 | | | 188 | | | — | | | 50,795 | | | Three Months Ended March 31, 2022 | | Contract <br>Drilling <br>Services | | | Completion <br>and <br>Production <br>Services | | | Corporate <br>and Other | | | Inter- <br>Segment <br>Eliminations | | | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | $ | 314,145 | | $ | 38,238 | | $ | — | | $ | (1,044 | ) | $ | 351,339 | | | Earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization | | 71,174 | | | 6,539 | | | (40,858 | ) | | — | | | 36,855 | | | Depreciation and amortization | | 62,653 | | | 3,350 | | | 2,454 | | | — | | | 68,457 | | | Gain on asset disposals | | (1,882 | ) | | (1,170 | ) | | (62 | ) | | — | | | (3,114 | ) | | Total assets | | 2,432,067 | | | 135,577 | | | 125,240 | | | — | | | 2,692,884 | | | Capital expenditures | | 35,228 | | | 1,000 | | | 174 | | | — | | | 36,402 | |

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

Three Months Ended March 31,
2023 2022
Total segment earnings before income taxes, loss<br> (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and<br> amortization $ 203,219 $ 36,855
Deduct:
Depreciation and amortization 71,543 68,457
Gain on asset disposals (9,276 ) (3,114 )
Foreign exchange (483 ) (518 )
Finance charges 22,920 20,730
Loss (gain) on investments and other assets 4,230 (5,569 )
Income taxes 18,455 713
Net earnings (loss) $ 95,830 $ (43,844 ) 
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NOTE 5. LONG-TERM DEBT

U.S. Denominated Facilities Canadian Facilities and Translated U.S. Facilities
March 31, December 31, March 31, 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 704 704 952 954
US $ 704 US $ 704 $ 2,285 $ 2,287
Long-Term Debt
Senior Credit Facility US $ 102,059 US $ 44,000 $ 137,923 $ 59,620
Canadian Real Estate Credit Facility — — 16,000 16,334
U.S. Real Estate Credit Facility 8,213 8,389 11,099 11,368
Unsecured Senior Notes:
7.125% senior notes due 2026 347,765 347,765 469,970 471,225
6.875% senior notes due 2029 400,000 400,000 540,560 542,004
US $ 858,037 US $ 800,154 1,175,552 1,100,551
Less net unamortized debt issue costs and original issue discount (13,926 ) (14,581 )
$ 1,161,626 $ 1,085,970
Senior Credit Facility Unsecured Senior Notes Canadian Real Estate Credit Facility U.S. Real Estate Credit Facility Debt Issue Costs and Original Issue 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 139,049 — — — — 139,049
Repayment of Senior Credit Facility (60,772 ) — — — — (60,772 )
Repayment of Real Estate<br> Credit Facility — — (334 ) (238 ) — (572 )
137,897 1,013,229 17,333 12,084 (14,581 ) 1,165,962
Amortization of debt issue costs — — — — 655 655
Foreign exchange adjustment 26 (2,699 ) — (33 ) — (2,706 )
March 31, 2023 $ 137,923 $ 1,010,530 $ 17,333 $ 12,051 $ (13,926 ) $ 1,163,911
Current $ — $ — $ 1,333 $ 952 $ — $ 2,285
Long-term 137,923 1,010,530 16,000 11,099 (13,926 ) 1,161,626
March 31, 2023 $ 137,923 $ 1,010,530 $ 17,333 $ 12,051 $ (13,926 ) $ 1,163,911

At March 31, 2023, Precision was in compliance with the covenants of the Senior Credit Facility and Real Estate Credit Facilities.

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NOTE 6. FINANCE CHARGES

Three Months Ended March 31,
2023 2022
Interest:
Long-term debt $ 21,213 $ 19,161
Lease obligations 862 659
Other 155 85
Income (104 ) (34 )
Amortization of debt issue costs, loan commitment fees and original issue discount 794 859
Finance charges $ 22,920 $ 20,730

NOTE 7. SHARE-BASED COMPENSATION PLANS

Liability Classified Plans

Restricted<br> <br>Share<br> <br>Units ^(a)^ ^^ Performance<br> <br>Share<br> <br>Units ^(a)^ ^^ Non-Management<br> <br>Directors’ DSUs ^(b)^ ^^ Total
December 31, 2022 $ 38,190 $ 100,858 $ 12,297 $ 151,345
Expensed during period (30 ) (8,333 ) (3,732 ) (12,095 )
Settlement in shares (2,102 ) (17,104 ) — (19,206 )
Payments and redemptions (26,409 ) (47,475 ) — (73,884 )
Foreign exchange 111 188 — 299
March 31, 2023 $ 9,760 $ 28,134 $ 8,565 $ 46,459
Current $ 7,997 $ 21,308 $ — $ 29,305
Long-term 1,763 6,826 8,565 17,154
$ 9,760 $ 28,134 $ 8,565 $ 46,459

(a) Restricted Share Units and PerformanceShare 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 65,257 121,350
Redeemed (264,622 ) (431,598 )
Forfeited (5,465 ) (7,400 )
March 31, 2023 290,338 819,023

(b) Non-Management Directors – DeferredShare 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 4,565
March 31, 2023 123,339 
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| --- |

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 Outstanding Weighted Average Fair Value
December 31, 2022 — $ —
Granted 46,740 96.90
March 31, 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 quarter ended March 31, 2023 was an expense of $0.5 million (2022 – nil).

(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 March 31, 2023 23,055 $ 87.00 — 145.97 $ 113.01 23,055
U.S. share options Outstanding Range of Exercise Price (US) Weighted <br>Average <br>Exercise Price <br>(US$) Exercisable
--- --- --- --- --- --- --- --- ---
December 31, 2022 141,748 $ 51.20 111.47 $ 84.84 141,748
Forfeited (8,595 ) 64.20 64.20 64.20
March 31, 2023 133,153 $ 51.20 111.47 $ 86.17 133,153

All values are in US Dollars.

(e) Non-Management Directors – DeferredShare Unit Plan

As at March 31, 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 (67,073 ) (4,993 )
March 31, 2023 13,721,788 2,313,746

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 March 31,
2023 2022
Net earnings (loss) - basic $ 95,830 $ (43,844 )
Effect of share options and other equity compensation plans (13,244 ) —
Net earnings (loss) - diluted $ 82,586 $ (43,844 ) 
| 10 |

| --- | | | Three Months Ended March 31, | | | | --- | --- | --- | --- | | (Stated in thousands) | | 2023 | 2022 | | Weighted average shares outstanding – basic | | 13,648 | 13,479 | | Effect of share options and other equity compensation plans | | 1,191 | — | | Weighted average shares outstanding – diluted | | 14,839 | 13,479 |

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 March 31, 2023 was approximately $964 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 COMBINATIONS

On July 27, 2022, Precision acquired the well servicing business and associated rental assets of High Arctic Energy Services Inc. for consideration of $38 million. On the date of acquisition, Precision made a $10 million cash payment. The remaining balance of $28 million was paid during the first quarter of 2023.

NOTE 12. INVESTMENTS AND OTHER ASSETS

Subsequent to March 31, 2023, Precision committed to a $5 million equity investment in CleanDesign Income Corp. (CleanDesign), a key supplier of Precision’s EverGreen™ Battery Energy Storage Systems (BESS). The investment provides Precision with key BESS and power management technologies and is aligned with the Company’s overall emissions reduction strategy.

| 11 |

| --- | | 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>Q1 2023 TRADING PROFILE<br><br> <br>Toronto (TSX: PD)<br><br> <br>High: $116.60<br><br> <br>Low: $61.79<br><br> <br>Close: $69.45<br><br> <br>Volume Traded: 7,910,252<br><br> <br><br><br> <br>New York (NYSE: PDS)<br><br> <br>High: US$86.94<br><br> <br>Low: US$44.92<br><br> <br>Close: US$51.42<br><br> <br>Volume Traded: 4,662,200<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<br> 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>Brian J. Gibson<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 | | --- | --- |

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