Upon Precision's conversion to an income trust effective November 7, 2005, the Trust adopted a policy of making monthly distributions to holders of Trust units and holders of Exchangeable LP units (together "Unitholders").

Precision has a legal entity structure whereby the trust entity, Precision Drilling Trust, effectively must flow its taxable income to unitholders pursuant to its Declaration of Trust. Distributions may be paid in cash or "in-kind" and may be reduced, increased or suspended entirely depending on the operations of Precision and the performance of its assets, or external factors, such as changes in tax laws by governments in Canada.

The actual cash flow available for distribution to Unitholders is a function of numerous factors, including the Trust's: financial performance; debt covenants and obligations; working capital requirements; productive capacity maintenance expenditures and expansion capital expenditure requirements for the purchase of property, plant and equipment; and number of Trust and Exchangeable LP units outstanding. The Trust considers these factors on a monthly basis in determining future distributions.

In the event that a distribution in the form of "in-kind" units is declared, the terms of the Declaration of Trust and the Limited Partnership Agreement require that the outstanding units be consolidated immediately subsequent to the distribution. The number of outstanding units would remain at the number outstanding immediately prior to the "in-kind" distribution. As a result, unitholders would not receive additional Units from an "in-kind" issuance and consolidation process and the declared amount of the "in-kind" would be retained in Precision.