Precision Drilling

Precision Drilling Corporation Announces Voting Results from the 2024 Annual and Special Meeting of Shareholders

CALGARY, Alberta, May 16, 2024 — Precision Drilling Corporation (Precision or the Company) is pleased to announce the results of the election of board members at its 2024 Annual and Special Meeting of Shareholders held on May 16, 2024 (the Annual Meeting). Shareholders approved the election of all eight (seven of whom are independent) of the nominee directors presented in the Company’s Management Information Circular (the Circular), dated April 3, 2024.

The shares represented at the Annual Meeting voting in favour of individual nominee directors are as follows:

Nominee

# Votes For

% Votes For

# Votes Withheld

% Votes Withheld

William T. Donovan 7,926,016 98.58 114,578 1.42
Steven W. Krablin 7,360,243 91.54 680,351 8.46
Lori A. Lancaster 7,924,950 98.56 115,644 1.44
Susan M. MacKenzie 7,901,897 98.28 138,697 1.72
Kevin O. Meyers 7,452,216 92.68 588,378 7.32
David W. Williams 7,944,654 98.81 95,940 1.19
Alice L. Wong 7,529,780 93.65 510,814 6.35
Kevin A. Neveu 7,963,039 99.04 77,555 0.96

All other items of business set forth in the Circular and considered at the Annual Meeting passed, including the non-binding advisory vote on the Corporation’s approach to executive compensation.

Michael R. Culbert has decided to retire from our Board after serving as a director since 2017. We thank Mr. Culbert for his dedicated service and many contributions as a director through the years. We are also pleased to welcome Alice L. Wong to serve on the Company’s Board of Directors. Alice has over 35 years of diverse experience in the nuclear fuel industry and currently serves as Senior Vice President and Chief Corporate Officer at Cameco. She brings a wealth of experience and knowledge that will enhance Precision’s existing Board.

The full results on all matters voted upon at the Annual Meeting will be filed on SEDAR (www.sedarplus.ca) and EDGAR (www.sec.gov).

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as AlphaTM that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreenTM suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For more information about Precision, please visit our website at www.precisiondrilling.com or contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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Precision Drilling Corporation Holding Virtual-Only 2024 Annual and Special Meeting of Shareholders on May 16

CALGARY, Alberta, May 02, 2024 — Precision Drilling Corporation (Precision) would like to remind shareholders that it is holding its 2024 Annual and Special Meeting of Shareholders (the Annual Meeting) on Thursday, May 16, 2024 at 10:00 a.m. MST. As previously announced, the Annual Meeting will be held in a virtual-only meeting format. The meeting format will provide all shareholders an equal opportunity to participate in the Annual Meeting regardless of their geographic location.

The Annual Meeting can be accessed by logging in online at https://meetnow.global/M2YFHPG. Registered shareholders and duly appointed proxyholders who participate in the Annual Meeting online will be able to listen to the Annual Meeting, ask questions and vote, all in real time, provided that they are connected to the internet. In all cases, shareholders must follow the instructions set out in their applicable proxy or voting instruction forms. Shareholders can vote by proxy in advance of the Annual Meeting as in prior years. Guests can listen to the Annual Meeting but will not be able to communicate or vote.

Additional information regarding shareholder participation in the Annual Meeting (including voting instructions) may be found in Precision’s Management Information Circular, dated April 3, 2024, which is available on our website (https://www.precisiondrilling.com/investors/financial-information-public-filings/). Additionally, detailed instructions for shareholders to participate in the meeting are provided in Precision’s Virtual AGM User Guide available on our website by selecting “Investor Relations,” then “Webcasts & Presentations.”

If you have questions regarding your ability to participate or vote at the Annual Meeting, please contact Precision’s registrar and transfer agent, Computershare, at 1-800-564-6253.

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For more information about Precision, please visit our website at www.precisiondrilling.com or contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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Precision Drilling

Precision Drilling Announces 2024 First Quarter Unaudited Financial Results

CALGARY, Alberta, April 25, 2024 — This news release contains “forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release. This news release 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 disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending, Working Capital and Total Long-term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies, see “Financial Measures and Ratios” later in this news release.

Financial Highlights

  • Revenue was $528 million compared to $559 million in the first quarter of 2023 with the decrease mainly attributable to lower U.S. activity.
  • Adjusted EBITDA(1) was $143 million and included share-based compensation charges of $23 million as our share price increased 27% in the first quarter. By comparison, Adjusted EBITDA in the first quarter of 2023 was $203 million and included a $12 million recovery as our share price decreased 33% in the first quarter of 2023.
  • Net earnings were $37 million or $2.53/share compared to $96 million or $7.02/share in the first quarter of 2023.
  • Completion and Production Services revenue and Adjusted EBITDA were $87 million and $19 million, respectively, compared with $75 million and $17 million in the same quarter last year.
  • Cash from operations was $66 million compared to $28 million in the comparative quarter.
  • Share repurchases were $10 million compared to $5 million in the first quarter of 2023.
  • Capital expenditures were $56 million compared to $51 million in the first quarter of 2023.
  • Precision remains on track to reduce debt between $150 million and $200 million in 2024 and return between 25% and 35% of free cash flow to shareholders in 2024.

Operational Highlights

  • Canada averaged 73 active drilling rigs, compared to 69 for the first quarter of 2023.
  • Canadian revenue per utilization day was $35,596 compared to $32,304 in the same period last year.
  • U.S. averaged 38 active drilling rigs compared to 60 for the first quarter of 2023.
  • U.S. revenue per utilization day was US$32,867 compared to US$34,963 in the same quarter last year.
  • International averaged eight active drilling rigs, with revenue per utilization day of US$52,808 compared to US$51,753 in the first quarter of 2023.
  • Service rig operating hours totaled 74,505, a 28% increase as compared with the same quarter last year driven by the CWC Energy Services (CWC) acquisition in late 2023.

    (1) See “FINANCIAL MEASURES AND RATIOS.”

MANAGEMENT COMMENTARY

“Precision had an impressive start to 2024 and we expect to build on this momentum throughout the year. Our Canadian drilling operations, international business, and completion and production services all outperformed during the first quarter and we more than doubled our cash from operations compared to the same period last year. We continued to focus on shareholder returns and repurchased $10 million of common shares in the first quarter. We remain firmly committed to repaying debt between $150 million and $200 million in 2024 and allocating 25% to 35% of our free cash flow to share buybacks.

“Our Canadian drilling business exceeded expectations in the first quarter as our Super Series rigs, AlphaTM technologies, EverGreenTM products, and dedicated crews continued to deliver High Performance, High Value services to our customers. Precision had 73 rigs active in the first quarter, representing a 6% increase over the same period last year while industry activity was 6% lower. With strong demand for our Super Series rigs and AlphaTM and EverGreenTM products that provide improved performance and efficiencies, we grew average day rates to $35,596. As the Trans Mountain pipeline expansion begins operating, followed by start-up activities of LNG Canada, we expect customer demand for our Super Series rigs to remain robust and support strong utilization well into 2025.

“In the U.S., even with industry activity down nearly 20% in the first quarter compared to the same period last year, we remain focused on returns. Our day rates averaged US$32,867 and we generated daily operating margins of $11,148(2). While U.S. drilling activity continues to be influenced by weak natural gas prices and merger and acquisition activity, we believe the long-term fundamentals are positive due to growing global oil demand, decreasing inventory of drilled but uncompleted wells, and the next wave of Gulf Coast LNG facilities projected to start-up in late 2024 and 2025.

“Internationally, following rig reactivations in 2023, we have eight active rigs, which generated revenue of US$38 million in the first quarter compared to US$22 million one year ago. These eight rigs are active in Kuwait and Saudi Arabia under five-year contracts, which provide stable and predictable cash flow that stretches into 2028.

“With the successful acquisition of CWC in late 2023, Precision solidified its position as Canada’s leading provider of high-quality and reliable well services. In the first quarter, we increased our well service hours 28% and grew Adjusted EBITDA to $19 million. The outlook for this business remains positive as the Trans Mountain pipeline expansion is expected to drive more oil service related activity, while increased regulatory spending requirements is expected to result in more abandonment work.

“As shown by our first quarter results and positive outlook, we expect sustained free cash flow to be a feature of the business and will continue to assess the best route to enhance shareholder returns. We currently believe this will be a function of achieving a sustained Net Debt to Adjusted EBITDA ratio(1) of less than 1.0 times, while increasing direct capital returns to shareholders towards 50%. I would like to thank the Precision team for their hard work and dedication to our High Performance, High Value strategy and look forward to a great year ahead and generating value for our shareholders,” stated Kevin Neveu, Precision’s President and CEO.

(1) See “FINANCIAL MEASURES AND RATIOS.”
(2) Defined as Revenue per utilization day less Operating costs per utilization day.

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

For the three months ended March 31,
(Stated in thousands of Canadian dollars, except per share amounts) 2024 2023 % Change
Revenue 527,788 558,607 (5.5 )
Adjusted EBITDA(1) 143,149 203,219 (29.6 )
Net earnings 36,516 95,830 (61.9 )
Cash provided by operations 65,543 28,356 131.1
Funds provided by operations(1) 117,765 159,653 (26.2 )
Cash used in investing activities 75,237 78,817 (4.5 )
Capital spending by spend category(1)
Expansion and upgrade 14,370 16,345 (12.1 )
Maintenance and infrastructure 41,157 34,450 19.5
Proceeds on sale (5,186 ) (7,765 ) (33.2 )
Net capital spending(1) 50,341 43,030 17.0
Net earnings per share:
Basic 2.53 7.02 (64.0 )
Diluted 2.53 5.57 (54.6 )
Weighted average shares outstanding:
Basic 14,407 13,648 5.6
Diluted 14,410 14,839 (2.9 )

(1) See “FINANCIAL MEASURES AND RATIOS.”

Operating Highlights

For the three months ended March 31,
2024 2023 % Change
Contract drilling rig fleet 214 225 (4.9 )
Drilling rig utilization days:
U.S. 3,453 5,382 (35.8 )
Canada 6,617 6,168 7.3
International 728 433 68.1
Revenue per utilization day:
U.S. (US$) 32,867 34,963 (6.0 )
Canada (Cdn$) 35,596 32,304 10.2
International (US$) 52,808 51,753 2.0
Operating costs per utilization day:
U.S. (US$) 21,719 20,271 7.1
Canada (Cdn$) 19,959 18,746 6.5
Service rig fleet 183 118 55.1
Service rig operating hours 74,505 58,341 27.7


Drilling Activity

Average for the quarter ended 2023 Average for the
quarter ended
2024
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31
Average Precision active rig count(1):
U.S. 60 51 41 45 38
Canada 69 42 57 64 73
International 5 5 6 8 8
Total 134 98 104 117 119

(1) Average number of drilling rigs working or moving.

Summary for the three months ended March 31, 2024:

  • Revenue decreased to $528 million compared with $559 million in the first quarter of 2023 as a result of lower U.S. activity and day rates, partially offset by higher Canadian and international activity and day rates.
  • Adjusted EBITDA was $143 million as compared with $203 million in 2023. Our lower 2024 Adjusted EBITDA was primarily the result of lower U.S. activity and day rates and increased share-based compensation charges, partially offset by increased Canadian and international activity and day rates. Share-based compensation was $23 million as compared to a recovery of $12 million in 2023. Please refer to “Other Items” later in this news release for additional information on share-based compensation.
  • Adjusted EBITDA as a percentage of revenue was 27% as compared with 36% in 2023.
  • U.S. revenue per utilization day was US$32,867 compared with US$34,963 in 2023. The decrease was primarily the result of lower fleet average day rates and lower turnkey revenue, offset by higher recoverable costs. We did not recognize revenue from idle but contracted rigs and turnkey projects as compared with US$1 million and US$7 million, respectively in 2023. Revenue per utilization day, excluding the impact of idle but contracted rigs and turnkey activity was US$32,867, compared to US$33,721 in 2023, a decrease of US$854 or 3%. Revenue per utilization day, excluding idle but contracted rigs, was consistent with the fourth quarter of 2023.
  • U.S. operating costs per utilization day increased to US$21,719 compared with US$20,271 in 2023. The increase is mainly due to higher recoverable costs, fixed costs spread over lower activity and higher repairs and maintenance, partially offset by lower turnkey costs. U.S. operating costs per utilization day, excluding turnkey, was US$21,719 compared with US$19,421 in 2023. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day increased US$704.
  • Canadian revenue per utilization day was $35,596 compared with $32,304 in 2023. The increase was a result of higher average day rates and recoverable costs. Sequentially, revenue per utilization day increased $980 due to higher recoverable costs and increased boiler revenue.
  • Canadian operating costs per utilization day increased to $19,959, compared with $18,746 in 2023, due to higher field wages and recoverable costs. Sequentially, daily operating costs increased $769 due to higher labour related costs, including burden and larger crew formations.
  • We realized US$38 million of international contract drilling revenue compared with US$22 million in 2023.
  • General and administrative expenses were $45 million as compared with $16 million in 2023. The increase was primarily due to higher share-based compensation charges.
  • Net finance charges were $18 million, a decrease of $5 million compared with 2023 and was the result of lower outstanding long-term debt.
  • Capital expenditures were $56 million compared with $51 million in 2023. Capital spending by spend category included $14 million for expansion and upgrades and $41 million for the maintenance of existing assets, infrastructure, and intangible assets.
  • Income tax expense for the quarter was $13 million as compared with $18 million in 2023. During the first quarter, we continued to not recognize deferred tax assets on certain international operating losses.
  • We generated cash from operations of $66 million, repurchased $10 million of our shares, and ended the quarter with $31 million of cash and more than $600 million of available liquidity.

OUTLOOK

The outlook for North America energy is positive as global demand continues to rise, while geopolitical issues continue to threaten supply. In Canada, the imminent start-up of the Trans Mountain pipeline expansion, followed by LNG Canada, will provide significant tidewater access for both Canadian crude and natural gas, supporting additional Canadian drilling activity. In the U.S., the next wave of LNG projects is expected to add approximately 12 bcf/d of export capacity over the next three years, supporting additional U.S. natural gas drilling activity.

In Canada, we currently have 48 rigs operating, ten more rigs than a year ago, and expect this trend to continue throughout spring break-up due to increasing year-round pad drilling in the Montney and heavy oil programs. Our Canadian fleet is in high demand and we expect customer demand for our Super Triple and Super Single pad capable fleets to exceed supply into 2025 with increased take away capacity.

In the U.S., we currently have 39 rigs operating as drilling activity continues to be influenced by weak natural gas prices and pending merger and acquisition transactions. We view these headwinds as short-term in nature and believe rig count could improve in the later part of 2024 with continued strong oil prices.

Internationally, we expect to have eight rigs running throughout all of 2024. This represents a 40% increase in activity compared to 2023, which should drive a 50% increase in our international earnings. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure additional rig activations.

As the premier well service provider in Canada, with size and scale, the outlook for this business is positive. We expect customer demand to increase with the start-up of the Trans Mountain pipeline expansion and increased regulatory spending requirements for well abandonments, supporting healthy activity and strong pricing into the foreseeable future.

We believe cost inflation is largely behind us and will continue to look for opportunities to lower costs.

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at April 24, 2024. For those quarters ending after March 31, 2024, 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.

As at April 24, 2024 Average for the quarter ended 2023 Average Average for the quarter ended 2024 Average
Mar. 31 June 30 Sept. 30 Dec. 31 2023 Mar. 31 June 30 Sept. 30 Dec. 31 2024
Average rigs under term contract:
U.S. 40 37 32 28 34 20 17 13 8 15
Canada 19 23 23 23 22 24 21 20 20 21
International 4 5 7 7 6 8 8 7 7 8
Total 63 65 62 58 62 52 46 40 35 44


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.

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

For the three months ended March 31,
(Stated in thousands of Canadian dollars, except where noted) 2024 2023 % Change
Revenue 443,367 486,076 (8.8 )
Expenses:
Operating 276,692 287,067 (3.6 )
General and administrative 13,002 9,886 31.5
Adjusted EBITDA(1) 153,673 189,123 (18.7 )
Adjusted EBITDA as a percentage of revenue(1) 34.7 % 38.9 %

(1) See “FINANCIAL MEASURES AND RATIOS.”

United States onshore drilling statistics:(1) 2024 2023
Precision Industry(2) Precision Industry(2)
Average number of active land rigs for quarters ended:
March 31 38 602 60 744

(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.

Canadian onshore drilling statistics:(1) 2024 2023
Precision Industry(2) Precision Industry(2)
Average number of active land rigs for quarters ended:
March 31 73 208 69 221

(1) Canadian operations only.
(2) Baker Hughes rig counts.

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

For the three months ended March 31,
(Stated in thousands of Canadian dollars, except where noted) 2024 2023 % Change
Revenue 87,087 74,523 16.9
Expenses:
Operating 65,480 54,792 19.5
General and administrative 3,002 2,325 29.1
Adjusted EBITDA(1) 18,605 17,406 6.9
Adjusted EBITDA as a percentage of revenue(1) 21.4 % 23.4 %
Well servicing statistics:
Number of service rigs (end of period) 183 118 55.1
Service rig operating hours 74,505 58,341 27.7
Service rig operating hour utilization 50 % 55 %

(1) See “FINANCIAL MEASURES AND RATIOS.”

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 2023 Annual Report.

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

For the three months ended March 31,
(Stated in thousands of Canadian dollars) 2024 2023
Cash settled share-based incentive plans 21,759 (12,095 )
Equity settled share-based incentive plans 875 480
Total share-based incentive compensation plan expense 22,634 (11,615 )
Allocated:
Operating 5,252 (1,883 )
General and Administrative 17,382 (9,732 )


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 2023 Annual Report.

EVALUATION OF CONTROLS AND PROCEDURES

Based on their evaluation as at March 31, 2024, 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, 2024, 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, 2024 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.

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 Accounting Standards to assess performance because we believe they provide useful supplemental information to investors.
Adjusted EBITDA We believe Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings and our reportable operating segment disclosures, is a useful measure because it gives an indication of the results 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.

The most directly comparable financial measure is net earnings.

For the three months ended March 31,
(Stated in thousands of Canadian dollars) 2024 2023
Adjusted EBITDA by segment:
Contract Drilling Services 153,673 189,123
Completion and Production Services 18,605 17,406
Corporate and Other (29,129 ) (3,310 )
Adjusted EBITDA 143,149 203,219
Depreciation and amortization 78,213 71,543
Gain on asset disposals (3,237 ) (9,276 )
Foreign exchange 394 (483 )
Finance charges 18,369 22,920
Loss (gain) on investments and other assets (228 ) 4,230
Incomes taxes 13,122 18,455
Net earnings 36,516 95,830

Funds Provided by (Used in) Operations We believe funds provided by (used in) operations, as reported in our Condensed Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital changes, which is primarily made up of highly liquid balances.

The most directly comparable financial measure is cash provided by (used in) operations.

Net Capital Spending We believe net capital spending is a useful measure as it provides an indication of our primary investment activities.

The most directly comparable financial measure is cash provided by (used in) investing activities.

Net capital spending is calculated as follows:

For the three months ended March 31,
(Stated in thousands of Canadian dollars) 2024 2023
Capital spending by spend category
Expansion and upgrade 14,370 16,345
Maintenance, infrastructure and intangibles 41,157 34,450
55,527 50,795
Proceeds on sale of property, plant and equipment (5,186 ) (7,765 )
Net capital spending 50,341 43,030
Business acquisitions 28,000
Purchase of investments and other assets 55
Receipt of finance lease payments (191 )
Changes in non-cash working capital balances 25,087 7,732
Cash used in investing activities 75,237 78,817

Working Capital We define working capital as current assets less current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.

Working capital is calculated as follows:

March 31, December 31,
(Stated in thousands of Canadian dollars) 2024 2023
Current assets 499,640 510,881
Current liabilities 291,533 374,009
Working capital 208,107 136,872

Total Long-term Financial Liabilities We define total long-term financial liabilities as total non-current liabilities less deferred tax liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.

Total long-term financial liabilities is calculated as follows:

March 31, December 31,
(Stated in thousands of Canadian dollars) 2024 2023
Total non-current liabilities 1,070,160 1,069,364
Deferred tax liabilities 64,032 73,515
Total long-term financial liabilities 1,006,128 995,849

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 Earnings, provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.
Long-term debt to long-term debt plus equity We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total shareholders’ equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage.
Net Debt to Adjusted EBITDA We believe that the Net Debt (long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations.
Supplementary Financial Measures
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.


CHANGE IN ACCOUNTING POLICY

Precision adopted Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants – Amendments to IAS 1, as issued in 2020 and 2022. These amendments apply retrospectively for annual reporting periods beginning on or after January 1, 2024 and clarify requirements for determining whether a liability should be classified as current or non-current. Due to this change in accounting policy, there was a retrospective impact on the comparative Statement of Financial Position pertaining to the Corporation’s deferred share unit (DSU) plan for non-management directors which are redeemable in cash or for an equal number of common shares upon the director’s retirement. In the case of a director retiring, the director’s respective DSU liability would become payable and the Corporation would not have the right to defer settlement of the liability for at least twelve months. As such, the liability is impacted by the revised policy. The following changes were made to the Statement of Financial Position:

  • As of January 1, 2023, accounts payable and accrued liabilities increased by $12 million and non-current share-based compensation liability decreased by $12 million.
  • As of December 31, 2023, accounts payable and accrued liabilities increased by $8 million and non-current share-based compensation liability decreased by $8 million.

The Corporation’s other liabilities were not impacted by the amendments. The change in accounting policy will also be reflected in the Corporation’s consolidated financial statements as at and for the year ending December 31, 2024.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

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

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

  • our strategic priorities for 2024;
  • our capital expenditures, free cash flow allocation and debt reduction plans for 2024 through to 2026;
  • anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2024;
  • the average number of term contracts in place for 2024;
  • customer adoption of AlphaTM technologies and EverGreenTM suite of environmental solutions;
  • timing and amount of synergies realized from acquired drilling and well servicing assets;
  • potential commercial opportunities and rig contract renewals; and
  • our future debt reduction plans.

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

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

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

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

Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2023, which may be accessed on Precision’s SEDAR+ profile at www.sedarplus.ca or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this release 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.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars) March 31, 2024 December 31, 2023(1) January 1, 2023(1)
ASSETS
Current assets:
Cash $ 30,948 $ 54,182 $ 21,587
Accounts receivable 432,674 421,427 413,925
Inventory 36,018 35,272 35,158
Total current assets 499,640 510,881 470,670
Non-current assets:
Income tax recoverable 696 682 1,602
Deferred tax assets 50,294 73,662 455
Property, plant and equipment 2,349,414 2,338,088 2,303,338
Intangibles 16,367 17,310 19,575
Right-of-use assets 65,625 63,438 60,032
Finance lease receivables 4,891 5,003
Investments and other assets 10,199 9,971 20,451
Total non-current assets 2,497,486 2,508,154 2,405,453
Total assets $ 2,997,126 $ 3,019,035 $ 2,876,123
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 266,298 $ 350,749 $ 404,350
Income taxes payable 3,782 3,026 2,991
Current portion of lease obligations 18,584 17,386 12,698
Current portion of long-term debt 2,869 2,848 2,287
Total current liabilities 291,533 374,009 422,326
Non-current liabilities:
Share-based compensation 5,942 16,755 47,836
Provisions and other 7,302 7,140 7,538
Lease obligations 57,742 57,124 52,978
Long-term debt 935,142 914,830 1,085,970
Deferred tax liabilities 64,032 73,515 28,946
Total non-current liabilities 1,070,160 1,069,364 1,223,268
Shareholders’ equity:
Shareholders’ capital 2,376,894 2,365,129 2,299,533
Contributed surplus 74,482 75,086 72,555
Deficit (975,513 ) (1,012,029 ) (1,301,273 )
Accumulated other comprehensive income 159,570 147,476 159,714
Total shareholders’ equity 1,635,433 1,575,662 1,230,529
Total liabilities and shareholders’ equity $ 2,997,126 $ 3,019,035 $ 2,876,123

(1) Comparative period figures were restated due to a change in accounting policy. See “CHANGE IN ACCOUNTING POLICY.”

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

Three Months Ended March 31,
(Stated in thousands of Canadian dollars, except per share amounts) 2024 2023
Revenue $ 527,788 $ 558,607
Expenses:
Operating 339,506 339,867
General and administrative 45,133 15,521
Earnings before income taxes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization 143,149 203,219
Depreciation and amortization 78,213 71,543
Gain on asset disposals (3,237 ) (9,276 )
Foreign exchange 394 (483 )
Finance charges 18,369 22,920
Loss (gain) on investments and other assets (228 ) 4,230
Earnings before income taxes 49,638 114,285
Income taxes:
Current 1,017 841
Deferred 12,105 17,614
13,122 18,455
Net earnings $ 36,516 $ 95,830
Net earnings per share:
Basic $ 2.53 $ 7.02
Diluted $ 2.53 $ 5.57


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

Three Months Ended March 31,
(Stated in thousands of Canadian dollars) 2024 2023
Net earnings $ 36,516 $ 95,830
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency 32,253 (4,140 )
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt (20,159 ) 2,673
Comprehensive income $ 48,610 $ 94,363


CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31,
(Stated in thousands of Canadian dollars) 2024 2023
Cash provided by (used in):
Operations:
Net earnings $ 36,516 $ 95,830
Adjustments for:
Long-term compensation plans 7,451 (4,117 )
Depreciation and amortization 78,213 71,543
Gain on asset disposals (3,237 ) (9,276 )
Foreign exchange 728 (502 )
Finance charges 18,369 22,920
Income taxes 13,122 18,455
Loss (gain) on investments and other assets (228 ) 4,230
Income taxes paid (234 ) (171 )
Interest paid (33,430 ) (39,375 )
Interest received 495 116
Funds provided by operations 117,765 159,653
Changes in non-cash working capital balances (52,222 ) (131,297 )
Cash provided by operations 65,543 28,356
Investments:
Purchase of property, plant and equipment (55,527 ) (50,795 )
Proceeds on sale of property, plant and equipment 5,186 7,765
Business acquisitions (28,000 )
Purchase of investments and other assets (55 )
Receipt of finance lease payments 191
Changes in non-cash working capital balances (25,087 ) (7,732 )
Cash used in investing activities (75,237 ) (78,817 )
Financing:
Issuance of long-term debt 139,049
Repayments of long-term debt (716 ) (61,344 )
Repurchase of share capital (10,081 ) (4,993 )
Lease payments (3,200 ) (1,961 )
Cash used in financing activities (13,997 ) 70,751
Effect of exchange rate changes on cash 457 (258 )
Increase (decrease) in cash (23,234 ) 20,032
Cash, beginning of period 54,182 21,587
Cash, end of period $ 30,948 $ 41,619


CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(Stated in thousands of Canadian dollars) Shareholders’
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Income
Deficit Total
Equity
Balance at January 1, 2024 $ 2,365,129 $ 75,086 $ 147,476 $ (1,012,029 ) $ 1,575,662
Net earnings for the period 36,516 36,516
Other comprehensive income for the period 12,094 12,094
Settlement of Executive Performance and Restricted Share Units 21,846 (1,479 ) 20,367
Share repurchases (10,081 ) (10,081 )
Share-based compensation expense 875 875
Balance at March 31, 2024 $ 2,376,894 $ 74,482 $ 159,570 $ (975,513 ) $ 1,635,433

(Stated in thousands of Canadian dollars) Shareholders’
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Income
Deficit Total
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


2024 FIRST QUARTER RESULTS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on Thursday, April 25, 2024.

To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions.

https://register.vevent.com/register/BIfbb4947b7fb84f509d7a52e0f86c196e

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision’s website for 12 months.

https://edge.media-server.com/mmc/p/xwmz5zaw

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For further information about Precision, please visit our website or contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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Precision Drilling Corporation Announces Filing of Management Information Circular, Virtual-Only Annual and Special Meeting of Shareholders, and 2023 ESG Performance Data

CALGARY, Alberta, April 03, 2024 — Precision Drilling Corporation (Precision or the Company) (TSX:PD; NYSE:PDS) announces today the filing of its Management Information Circular (the Circular) issued in connection with the 2024 Annual and Special Meeting of Shareholders (the Annual Meeting). A copy of the Circular can be downloaded from the Company’s SEDAR+ profile at www.sedarplus.ca and the Company’s EDGAR profile at www.sec.gov. The Circular is also available on Precision’s website at www.precisiondrilling.com.

Precision’s Annual Meeting will be held on Thursday, May 16, 2024 at 10:00 a.m. (Mountain Time) for holders of its common shares (Shareholders). The Annual Meeting will be held in a virtual-only meeting format. The virtual-only meeting format will provide all Shareholders an equal opportunity to participate in the Annual Meeting regardless of their geographic location. Please see below and the Circular for details and instructions on participating and voting at the Annual Meeting.

The Annual Meeting can be accessed by logging in online at https://meetnow.global/M2YFHPG. As detailed in the Circular, registered Shareholders are entitled to participate in the Annual Meeting if they held their common shares as of the close of business on March 27, 2024, the record date. Non-registered (beneficial) Shareholders who wish to vote at the Annual Meeting will be required to appoint themselves as proxyholder in advance of the Annual Meeting by writing their own name in the space provided on the voting instruction form provided by their intermediary, generally being a bank, trust company, securities broker, trustee or other institution. Registered Shareholders and duly appointed proxyholders who participate in the Annual Meeting online will be able to listen to the Annual Meeting, ask questions and vote, all in real time, provided that they are connected to the internet. Guests can listen to the Annual Meeting but will not be able to communicate or vote. In all cases, Shareholders must follow the instructions set out in their applicable proxy or voting instruction forms. If you have questions regarding your ability to participate or vote at the Annual Meeting, please contact Computershare at 1-800-564-6253.

Precision has released its 2023 Environmental, Social, and Governance (ESG) performance data, which aligns with the Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), and Global Reporting Initiative (GRI) frameworks. As a reminder, we consistently provide updates on our extensive ESG initiatives on the Company’s website. For more information, please visit our interactive webpage at www.precisiondrilling.com/esg.

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For more information about Precision, please visit our website at www.precisiondrilling.com or contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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Precision Drilling Corporation 2024 First Quarter Results Conference Call and Webcast

CALGARY, Alberta, April 02, 2024 — Precision Drilling Corporation (Precision) intends to release its 2024 first quarter results before the market opens on Thursday, April 25, 2024, and has scheduled a conference call to begin at 12:00 noon MT (2:00 p.m. ET) on the same day.

To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions.

https://register.vevent.com/register/BIfbb4947b7fb84f509d7a52e0f86c196e

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision’s website for 12 months.

https://edge.media-server.com/mmc/p/xwmz5zaw

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For more information about Precision, please visit our website at www.precisiondrilling.com or contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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Precision Drilling Corporation Announces Filing of Annual Disclosure Documents

CALGARY, Alberta, March 04, 2024 — Precision Drilling Corporation (Precision) announces that it has filed its annual disclosure documents with the securities commissions in each of the provinces of Canada and the United States Securities and Exchange Commission (SEC).

Precision’s 2023 Annual Report contains the audited consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2023. Precision’s financial results for the year ended December 31, 2023 were previously released on February 6, 2024.

Precision’s Annual Report and Annual Information Form have been filed on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR+) and on Form 40-F on the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.

The documents described above are also available on Precision’s website at www.precisiondrilling.com or by emailing Precision at [email protected].

Precision’s 2024 Annual and Special Meeting of Shareholders will be held in a virtual-only format at 10:00 a.m. MDT on Thursday, May 16, 2024.

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For more information about Precision, please visit our website at www.precisiondrilling.com or contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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Precision Drilling Reports 2023 Fourth Quarter and Year-End Unaudited Financial Results

CALGARY, Alberta, Feb. 06, 2024 — This news release contains “forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on acquisition, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, loss on asset decommissioning, gain on asset disposals, and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending and Working Capital. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures used by other companies, see “Financial Measures and Ratios” later in this news release.

Precision Drilling announces strong 2023 fourth quarter results plus 2024 capital budget and shareholder return targets:

  • Revenue and Adjusted EBITDA(1) were $507 million and $151 million, respectively, as compared with $511 million and $91 million in 2022.
  • Net earnings were $147 million ($10.42 per share) as compared with $3 million ($0.27 per share) in 2022. Our 2023 results included the following non-recurring items:
    • transaction costs and severance of $6 million;
    • non-cash charge of $10 million from the decommissioning of 27 drilling rigs;
    • $26 million gain from our acquisition of CWC Energy Services Corp. (CWC); and
    • an income tax recovery of $69 million, as we recognized a deferred income tax asset of $73 million related to the expected future use of certain Canadian operating losses.
  • Our fourth quarter Adjusted EBITDA of $151 million included share-based compensation of $13 million and $6 million of transaction costs and severance. In comparison, our 2022 Adjusted EBITDA of $91 million included $75 million of share-based compensation and nil transaction costs and severance.
  • Grew fourth quarter revenue per utilization day 16% in Canada to $34,616 and 10% in the U.S. to US$34,452 as compared with 2022.
  • Internationally, we activated an additional rig in the fourth quarter and have a total of eight active rigs working in the Middle East on term contracts. In 2024, we expect our average active international rig count to increase approximately 40% as compared with 2023.
  • Completion and Production Services generated fourth quarter revenue of $62 million and Adjusted EBITDA of $12 million, both comparable to the same period last year.
  • We completed our acquisition of CWC and have realized approximately $12 million of our anticipated annualized synergies of $20 million.
  • Our fourth quarter cash provided by operations of $170 million helped fund capital expenditures of $79 million, debt repayment of $87 million, which included the full repayment of CWC’s $51 million syndicated loan, and share repurchases of $17 million.
  • Continued to strengthen our financial position, ending the year with $54 million of cash, a Net Debt to Adjusted EBITDA ratio(1) of approximately 1.4 times, and more than $600 million of available liquidity.
  • For the year ended December 31, 2023, we achieved our annual debt reduction and return of shareholder capital targets, reducing debt by $152 million and repurchasing $30 million of common shares.
  • Based on our current free cash flow outlook, we expect to reduce debt by $150 million to $200 million in 2024 and allocate 25% to 35% of free cash flow before debt repayments toward share repurchases.
  • Our 2024 capital budget is $195 million, which is lower than the $227 million invested in 2023.

(1) See “FINANCIAL MEASURES AND RATIOS”.

Precision’s President and CEO, Kevin Neveu, stated:

“Precision continued to deliver strong results in the fourth quarter, generating revenue of $507 million, Adjusted EBITDA of $151 million and net earnings of $147 million. This concluded one of our most profitable years in the past decade and allowed us to exceed our cash flow expectations. During the year, we not only met our debt reduction and shareholder capital return targets but also funded two accretive acquisitions. Our High Performance, High Value strategy along with our Super Series rigs, AlphaTM technologies, and EverGreenTM suite of environmental solutions continue to differentiate our services.

“We are pleased with the broad market acceptance of our AlphaTM technologies with 75% of our Super Triple drilling days during 2023 including AlphaAutomationTM and several AlphaAppsTM. Our customers see the benefits of predictable and repeatable drilling performance and the inherent efficiencies this creates on pad drilling projects. Our EverGreenTM suite of environmental solutions including Battery Energy Storage Systems (BESS), grid power connections, diesel fuel emission and reduction systems, and low-emission location lighting solutions has also gained widespread adoption, with approximately 65% of our Super Triple fleet employing one or more of these solutions. We believe both our AlphaTM and EverGreenTM product lines will continue to drive market share gains and deliver strong financial returns for Precision on these investments.

“Precision’s Canadian drilling business in 2023 displayed high utilization, expanded profitability and deeper relationships with our customers. We completed several customer requested upgrades to our fleet and secured multiple term contracts throughout the year, averaging 23 in the fourth quarter, a 44% increase over the fourth quarter of 2022. We currently have 80 rigs active, which exceeds our highest rig count in 2023. We expect demand to remain firm through the winter drilling season and ramp up after spring breakup as the Trans Mountain pipeline expansion becomes operational and Coastal GasLink begins to support LNG Canada start-up activities. This additional takeaway capacity is expected to continue to drive demand for our Super Triples and pad-capable Super Singles, which we expect to be in high demand for the balance of 2024 and beyond.

“In the U.S., industry drilling activity in 2023 was impacted by weak natural gas prices, oil price volatility, and merger and acquisition activity, resulting in a 21% decline in the active rig count year over year. Since mid-2023 Precision’s active rig count has remained steady near the low-40s. We continue to sign contracts with customers and based on recent conversations, we expect activity to begin to increase later in the second quarter.

“Internationally, we recertified and reactivated four Kuwait rigs in 2023 and now have eight active rigs working in the Kingdom of Saudi Arabia and Kuwait. With these additional rigs, we expect our activity to increase approximately 40% year over year and provide predictable future cash flow as the majority of these rigs are under five-year term contracts that extend into 2027 and 2028. We continue to explore opportunities to deploy our remaining idle rigs in the region.

“Precision’s Completion and Production Services segment generated $51 million of Adjusted EBITDA during the year, representing a 34% increase over the prior year, driven by an 18% increase in activity from Precision well servicing. With strong Canadian fundamentals, the timely acquisition of CWC in late-2023 is proving to be highly successful. We have fully integrated operations and have realized approximately $12 million of the expected $20 million in annual synergies. With the acquisitions of CWC in 2023 and High Arctic’s well servicing assets in 2022, Precision has solidified its position as the premier well service provider in Canada and transformed this portion of our business into a meaningful contributor to Precision’s free cash flow.

“I am proud of our accomplishments in 2023. We successfully delivered on our three strategic priorities: generated significant free cash flow; strengthened our financial position by reducing our debt by $152 million; and increased direct returns to shareholders by allocating 15% of our free cash flow to share repurchases. In 2024, we plan to increase our direct shareholder capital return program by allocating 25% to 35% of our free cash flow, before debt repayments, to share repurchases. Our focus on our debt reduction strategy remains firmly in place and in 2024, we plan to reduce debt by another $150 million to $200 million. This positions us to achieve our sustained Net Debt to Adjusted EBITDA ratio target of below 1.0 times by the end of 2025 and meet our long-term debt reduction target of $500 million between 2022 and 2025. As of December 31, 2023, we have repaid $258 million of this $500 million target.

“Looking ahead, we expect sustained free cash flow to be a feature of the business and will continue to assess the best route to drive shareholder returns. We currently believe this will be a function of increasing direct capital returns to shareholders while continuing to strengthen the balance sheet. As a result, we plan to reduce debt another $100 million by the end of 2026 and continue to move our direct shareholder capital returns towards 50% of free cash flow.

“I would like to thank our employees for their dedication and our shareholders for their support. With constructive long-term fundamentals for energy, combined with our High Performance, High Value strategy, I am confident we will continue to drive shareholder value,” concluded Mr. Neveu.

SELECT FINANCIAL AND OPERATING INFORMATION (UNAUDITED)

Financial Highlights (Unaudited)

(Stated in thousands of Canadian dollars, For the three months ended December 31, For the year ended December 31,
except per share amounts) 2023 2022 % Change 2023 2022 % Change
Revenue 506,871 510,504 (0.7 ) 1,937,854 1,617,194 19.8
Adjusted EBITDA(1) 151,231 91,090 66.0 611,118 311,605 96.1
Net earnings (loss) 146,722 3,483 4,112.5 289,244 (34,293 ) (943.4 )
Cash provided by operations 170,255 159,082 7.0 500,571 237,104 111.1
Funds provided by operations(1) 145,189 111,339 30.4 533,409 282,994 88.5
Cash used in investing activities 57,627 45,579 26.4 214,784 144,415 48.7
Capital spending by spend category(1)
Expansion and upgrade 24,459 12,699 92.6 63,898 63,305 0.9
Maintenance and infrastructure 54,388 44,610 21.9 162,851 120,945 34.6
Proceeds on sale (3,117 ) (5,165 ) (39.7 ) (23,841 ) (37,198 ) (35.9 )
Net capital spending(1) 75,730 52,144 45.2 202,908 147,052 38.0
Net earnings (loss) per share:
Basic 10.42 0.27 3,759.3 21.03 (2.53 ) (931.2 )
Diluted 9.81 0.27 3,533.3 19.53 (2.53 ) (871.9 )

(1) See “FINANCIAL MEASURES AND RATIOS”.

Operating Highlights

For the three months ended December 31, For the year ended December 31,
2023 2022 % Change 2023 2022 % Change
Contract drilling rig fleet 214 225 (4.9 ) 214 225 (4.9 )
Drilling rig utilization days:
U.S. 4,138 5,482 (24.5 ) 17,961 20,396 (11.9 )
Canada 5,909 6,058 (2.5 ) 21,156 20,519 3.1
International 693 552 25.5 2,132 2,190 (2.6 )
Revenue per utilization day:
U.S.(US$) 34,452 31,242 10.3 35,040 27,309 28.3
Canada(Cdn$) 34,616 29,886 15.8 33,151 27,037 22.6
International(US$) 49,872 49,918 (0.1 ) 50,840 51,242 (0.8 )
Operating costs per utilization day:
U.S.(US$) 21,039 19,253 9.3 20,401 18,635 9.5
Canada(Cdn$) 19,191 17,538 9.4 19,925 17,007 17.2
Service rig fleet 183 135 35.6 183 135 35.6
Service rig operating hours 56,683 49,368 14.8 201,627 170,362 18.4


Financial Position (Unaudited)

(Stated in thousands of Canadian dollars, except ratios) December 31, 2023 December 31, 2022
Working capital(1) 145,239 60,641
Cash 54,182 21,587
Long-term debt 914,830 1,085,970
Total long-term financial liabilities 1,004,216 1,206,619
Total assets 3,019,035 2,876,123
Long-term debt to long-term debt plus equity ratio(1) 0.37 0.47

(1) See “FINANCIAL MEASURES AND RATIOS”.

Summary for the three months ended December 31, 2023:

  • Revenue of $507 million was largely consistent with 2022 as the strengthening of North America revenue rates and increased well service and international activity were offset by lower North America drilling activity. Drilling rig utilization days decreased 25% and 3% in the U.S. and Canada, respectively. International activity increased 26% as we reactivated rigs in the Middle East. Our service rig operating hours increased 15% as compared with 2022.
  • Adjusted EBITDA was $151 million as compared with $91 million in 2022. Our higher 2023 Adjusted EBITDA was primarily the result of lower share-based compensation, partially offset by $6 million in transaction costs and severance. Share-based compensation was $13 million as compared with $75 million in 2022. Please refer to “Other Items” later in this news release for additional information on share-based compensation.
  • Adjusted EBITDA as a percentage of revenue was 30% as compared with 18% in 2022.
  • Our U.S. revenue per utilization day was US$34,452 compared with US$31,242 in 2022. The increase was primarily the result of higher fleet average day rates, idle but contracted rig revenue and cost recoveries, partially offset by lower turnkey revenue. We recognized revenue from idle but contracted rigs and turnkey activity of US$7 million and nil, respectively, as compared with nil and US$4 million in 2022. Revenue per utilization day, excluding the impact of idle but contracted rigs and turnkey activity was US$32,189, compared to US$30,504 in 2022, an increase of US$1,685 or 6%. Revenue per utilization day, excluding idle but contracted rigs and turnkey activity, decreased US$1,354 from the third quarter of 2023.
  • Our U.S. operating costs per utilization day increased to US$21,039 compared with US$19,253 in 2022. The increase was primarily due to higher rig operating costs, repairs and maintenance, recoverable costs and the impact of fixed costs being spread over fewer activity days. U.S. operating costs per utilization day, excluding turnkey, was US$21,015 compared with US$18,655 in 2022. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day decreased US$587. The decrease was primarily due to lower repairs and maintenance, partially offset by the impact of fixed costs being spread over fewer activity days.
  • In Canada, revenue per utilization day was $34,616 compared with $29,886 in 2022. The increase was a result of higher average day rates and cost recoveries. Sequentially, revenue per utilization day increased $2,392 due to higher boiler revenue.
  • Our Canadian operating costs per utilization day increased to $19,191, compared with $17,538 in 2022, due to higher field wages and recoverable costs, partially offset by lower repairs and maintenance. Sequentially, our daily operating costs increased $880 due to higher field wages and recoverable costs, partially offset by fixed costs being spread over a higher activity base.
  • Completion and Production Services revenue and Adjusted EBITDA were $62 million and $12 million, respectively, compared with $59 million and $12 million in 2022.
  • We realized US$35 million of international contract drilling revenue compared with US$28 million in 2022. Our increased revenue was the result of higher activity as we reactivated rigs in the Middle East.
  • General and administrative expenses were $39 million as compared with $79 million in 2022. The decrease was primarily due to lower share-based compensation, partially offset by $4 million in transaction costs and severance.
  • We recognized non-recurring transaction costs and severance of $6 million which were presented as increases to operating and general and administrative costs of $2 million and $4 million, respectively.
  • Net finance charges were $19 million, a decrease of $4 million compared with 2022 and was the result of lower outstanding long-term debt.
  • We decommissioned 20 legacy drilling rigs from our Canadian fleet and seven from our U.S. fleet, recognizing a non-cash loss on asset decommissioning of $10 million.
  • Cash provided by operations was $170 million compared with $159 million in 2022. We generated $145 million of funds provided by operations compared with $111 million in 2022. Our increased day rates, revenue efficiency and operational leverage continued to drive higher cash generation in 2023.
  • Capital expenditures were $79 million compared with $57 million in 2022. Capital spending by spend category(1) included $24 million for expansion and upgrades and $54 million for the maintenance of existing assets, infrastructure, and intangible assets.
  • We reduced debt by $25 million, primarily from the redemption of US$26 million of 2026 unsecured senior notes, offset by the assumption of the $10 million CWC Real Estate Credit Facility, and ended the quarter with $54 million of cash and more than $600 million of available liquidity.

(1) See “FINANCIAL MEASURES AND RATIOS”.

Summary for the twelve months ended December 31, 2023:

  • Revenue for the twelve months of 2023 was $1,938 million, an increase of 20% from 2022.
  • Adjusted EBITDA was $611 million as compared with $312 million in 2022. Our higher Adjusted EBITDA was attributable to increased North America drilling and service revenue rates, higher Canadian drilling and service activity and lower share-based compensation, partially offset by lower U.S. and international drilling activity.
  • General and administrative costs were $122 million, a decrease of $59 million from 2022 primarily due to lower share-based compensation, partially offset by non-recurring transaction costs and severance of $4 million, higher labour-related costs and the impact of the weakening Canadian dollar on our translated U.S. dollar-denominated costs.
  • Net finance charges were $83 million as compared with $88 million in 2022. Our decreased net finance charges in 2023 were the result of our lower debt balance, partially offset by the impact of higher variable interest rates and higher translated U.S. dollar-denominated interest charges due to the weakening of the Canadian dollar.
  • Cash provided by operations was $501 million as compared with $237 million in 2022. Funds provided by operations in 2023 were $533 million, an increase of $250 million from the comparative period. Our higher cash generation in 2023 was attributable to our increased revenue efficiency, higher Canadian drilling and service activity and lower share-based compensation, partially offset by lower U.S. and international drilling activity.
  • Capital expenditures were $227 million in 2023, an increase of $42 million from 2022. Capital spending by spend category included $64 million for expansion and upgrades and $163 million for the maintenance of existing assets, infrastructure, and intangible assets. Capital expenditures were $12 million higher than guidance due to the timing of equipment deliveries.
  • Our investment activities for the year included the deferred payment of $28 million from our 2022 acquisition of High Arctic Energy Services Inc. (High Arctic), $14 million of cash consideration for the CWC acquisition, a $5 million investment in CleanDesign Income Corp. and proceeds of $10 million from the sale of Cathedral Energy Services Ltd. shares.
  • Year to date, we have reduced debt by $152 million from the full repayment of our Senior Credit Facility and US$74 million of repurchases and redemptions of our 2026 unsecured senior notes, partially offset by the assumption of the $10 million CWC Real Estate Credit Facility. In addition, we repurchased and cancelled 412,623 common shares for $30 million under our Normal Course Issuer Bid (NCIB).

STRATEGY

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

Below we summarize the results of our 2023 strategic priorities:

  1. Deliver High Performance, High Value service through operational excellence.
    • Increased our Canadian drilling rig utilization days and well servicing rig operating hours over 2022, maintaining our position as the leading provider of high-quality and reliable services in Canada.
    • Recertified and reactivated a total of four rigs in the Middle East, exiting 2023 with eight active rigs that represent approximately US$475 million in backlog revenue that stretches into 2028.
    • Acquired CWC in November, expanding our Canadian well servicing business and North America drilling rig fleet.
    • Reinvested $227 million into our equipment and infrastructure. This included a significant upgrade to add the industry’s most advanced AC Super Triple rig to our Canadian fleet, equipped with AlphaTM automation, EverGreenTM products, and rig floor robotics.
    • Coached over 900 rig-based employees through our New Employee Orientation focused on industry-leading safety and performance training at our world-class facilities in Nisku, Alberta and Houston, Texas.
  2. Maximize free cash flow by increasing Adjusted EBITDA margins, revenue efficiency, and growing revenue from AlphaTM technologies and EverGreenTM suite of environmental solutions.
    • Generated cash from operations of $501 million, a 111% increase over 2022.
    • Increased our daily operating margins(1) 32% in Canada and 69% in the U.S. year over year.
    • Grew combined AlphaTM and EverGreenTM revenue by over 10% compared with 2022.
    • Ended the year with 75 AC Super Triple AlphaTM rigs compared to 70 at the beginning of the year.
    • Scaled our EverGreenTM suite of environmental solutions, ending the year with approximately 65% of our AC Super Triple rigs equipped with at least one EverGreenTM product, including 13 EverGreenTM BESS versus seven a year ago.
    • Integrated the well servicing assets from our 2022 acquisition of High Arctic, which helped increase our annual Completion and Production Services’ Adjusted EBITDA 34% in 2023.
  3. Reduce debt by at least $150 million and allocate 10% to 20% of free cash flow before debt repayments for share repurchases. Long-term debt reduction target of $500 million between 2022 and 2025 and sustained Net Debt to Adjusted EBITDA ratio(2) of below 1.0 times by the end of 2025.
    • Reduced debt by $152 million and ended the year with more than $600 million of available liquidity.
    • Returned $30 million of capital to shareholders through share repurchases and renewed our NCIB, allowing us to purchase up to approximately 10% of our public float.
    • Ended the year with a Net Debt to Adjusted EBITDA ratio(1) of approximately 1.4 times and remain committed to reaching a sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times by the end of 2025.

(1) Revenue per utilization day less operating costs per utilization day.
(2) See “FINANCIAL MEASURES AND RATIOS”.

2024 Strategic Priorities

Precision’s strategic priorities for 2024 are focused on increasing our capital returns to shareholders by delivering best-in-class service and generating free cash flow. Precision’s strategic priorities for 2024 are as follows:

  1. Concentrate organizational efforts on leveraging our scale and generating free cash flow.
  2. Reduce debt by $150 million to $200 million and allocate 25% to 35% of free cash flow before debt repayments to share repurchases, while remaining committed to achieving a sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times by the end of 2025. Increase long-term debt reduction target to $600 million between 2022 and 2026 and continue to move direct shareholder capital returns towards 50% of free cash flow.
  3. Continue to deliver operational excellence in drilling and service rig operations to strengthen our competitive position and extend market penetration of our Alpha™ and EverGreen™ products.

OUTLOOK

Energy industry fundamentals continue to support drilling activity for oil and natural gas despite economic uncertainty and the continued presence of global conflict. Today, oil prices are supported by increasing global demand and limited supply growth as OPEC continues to honor its lower production quotas and producers remain committed to returning capital to shareholders versus increasing production. Current depressed global inventories, potential refilling of the U.S. Strategic Petroleum Reserve, and fewer high quality drilling locations all provide cautious optimism for price improvements.

Natural gas has demonstrated price weaknesses since early 2023; however, this lower-carbon energy source is becoming increasingly favored as countries around the world stress the importance of sustainability, decarbonization and energy security. Even with the recent U.S. moratorium on new U.S. Liquefied Natural Gas (LNG) export terminals, we still expect North American LNG export capacity (including LNG Canada) to increase by more than 14 bcf/d over the next three years due to projects that are currently under construction. We therefore anticipate a sustained period of elevated natural gas drilling activity in both the U.S. and Canada.

In Canada, Precision’s drilling activity remained strong throughout 2023 and we expect high activity levels to continue into 2024 due to strong oil prices, tight supply of Super-Spec drilling rigs and increases in hydrocarbon export capacity. The Trans Mountain oil pipeline expansion is expected to be commissioned late in the first half of 2024, increasing Canada’s tidewater takeaway capacity for crude oil by approximately 590,000 barrels per day. The Coastal GasLink pipeline achieved mechanical completion in late 2023 and will deliver gas to LNG Canada, which is expected to begin start-up activities in 2024.

Northwestern Alberta and Northeastern British Columbia natural gas developments are prime beneficiaries of LNG Canada. The January 2023 agreement between the Government of British Columbia and the Blueberry River First Nation facilitated a significant increase in drilling license approvals and should lead to more drilling activity in the region. Large pad drilling programs are ideally suited for our Super Triple rigs, resulting in strong customer interest for these rigs over the next several years. We expect our Super Triple fleet to be in high demand in 2024 and beyond, supporting higher day rates and daily operating margins, and longer-term take-or-pay contracts. In January 2024, we added the industry’s most advanced Super Triple to our Canadian fleet on a three-year term contract, bringing our Canadian Super Triple fleet size to 30.

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

In the U.S., drilling activity began to weaken in early 2023 due to lower natural gas prices and oil price volatility and was exacerbated by drilling and completion efficiencies, consolidation among producers, and continued capital discipline. As a result in 2023, the fourth quarter U.S. active land rig count declined by approximately 20% as compared with 2022. If oil prices remain stable and around today’s level, we expect demand to begin to improve in the second quarter and gain momentum through the remainder of 2024 as customers embark on a new budget cycle, seek to maintain or possibly increase production levels, and replenish inventories.

Our AlphaTM technologies and EverGreenTM 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. Currently, approximately 65% of our Super Triple rigs have at least one EverGreenTM product, including 13 EverGreenTM BESS. These battery systems have proven to be an economically viable emissions reduction solution for our customers, and we anticipate continued demand for additional deployments in 2024.

Internationally, we activated our eighth rig in November and now have five active rigs in Kuwait and three active rigs in the Kingdom of Saudi Arabia and expect to increase activity approximately 40% year over year. The majority of these rigs are on five-year term contracts that stretch into 2027 and 2028, providing Precision with predictable cash flow for the next several years. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure rig reactivations.

Precision is the leading provider of high-quality and reliable well services in Canada and the outlook for this business is positive. High customer demand for well maintenance and completion services is expected to add tightness to the availability of staffed service rigs, supporting healthy activity and pricing into the foreseeable future. In November, Precision closed the acquisition of CWC, which enhances our Canadian well servicing offering with high-quality rigs in complementary geographic regions. The acquisition is expected to increase activity approximately 40% in 2024 and provide accretive cash flow on a per share basis.

Commodity Prices

Fourth quarter average West Texas Intermediate and Western Canadian Select oil prices decreased 5% and 14%, respectively, from 2022. Average Henry Hub and AECO natural gas prices declined 52% and 56%, respectively from 2022.

For the three months ended December 31, For the year ended December 31,
2023 2022 2023 2022
Average oil and natural gas prices
Oil
West Texas Intermediate (per barrel) (US$) 78.33 82.77 77.62 94.23
Western Canadian Select (per barrel) (US$) 56.40 65.87 58.96 78.15
Natural gas
United States
Henry Hub (per MMBtu) (US$) 2.91 6.10 2.67 6.51
Canada
AECO (per MMBtu) (CDN$) 2.30 5.24 2.64 5.43


Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at February 5, 2024. For those quarters ending after December 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 2023 Average for the quarter ended 2024
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
Average rigs under term contract as of February 5, 2024:
U.S. 40 37 32 28 20 16 11 8
Canada 19 23 23 23 24 22 19 18
International 4 5 7 7 8 8 7 7
Total 63 65 62 58 52 46 37 33

The following chart outlines the average number of drilling rigs that we had under term contract for 2023 and the average number of rigs we have under term contract as at February 5, 2024.

Average for the year ended
2023 2024
Average rigs under term contract as of February 5, 2024:
U.S. 34 14
Canada 22 21
International 6 8
Total 62 43

In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. Accordingly, our anticipated Canadian rigs under term contract may fluctuate as customers complete their commitments earlier than projected. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year.

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 June 30 Sept. 30 Dec. 31
Average Precision active rig count:
U.S. 51 55 57 60 60 51 41 45
Canada 63 37 59 66 69 42 57 64
International 6 6 6 6 5 5 6 8
Total 120 98 122 132 134 98 104 117

According to industry sources, as at February 5, 2024, the U.S. active land drilling rig count has decreased 19% from the same point last year while the Canadian active land drilling rig count has decreased 7%. To date in 2024, approximately 80% of the U.S. industry’s active rigs and 60% of the Canadian industry’s active rigs were drilling for oil targets, compared with 79% for the U.S. and 63% for Canada at the same time last year.

Capital Spending and Free Cash Flow Allocation

We remain committed to disciplined cash flow management, capital spending and returning capital to shareholders. In 2024, capital spending is expected to be $195 million. By spend category, we expect to incur $155 million for sustaining, infrastructure and intangibles, including approximately $45 million of long-lead items, and $40 million for expansion and upgrades. We expect that the $195 million will be split as follows: $177 million in the Contract Drilling Services segment, $13 million in the Completion and Production Services segment, and $5 million in the Corporate segment.

As at December 31, 2023, we had capital commitments of approximately $175 million with payments expected through 2026.

SEGMENTED FINANCIAL RESULTS (UNAUDITED)

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

For the three months ended December 31, For the year ended December 31,
(Stated in thousands of Canadian dollars) 2023 2022 % Change 2023 2022 % Change
Revenue:
Contract Drilling Services 446,503 453,225 (1.5 ) 1,704,265 1,436,134 18.7
Completion and Production Services 62,459 59,250 5.4 240,716 187,171 28.6
Inter-segment eliminations (2,091 ) (1,971 ) 6.1 (7,127 ) (6,111 ) 16.6
506,871 510,504 (0.7 ) 1,937,854 1,617,194 19.8
Adjusted EBITDA:(1)
Contract Drilling Services 162,459 137,551 18.1 630,761 397,753 58.6
Completion and Production Services 12,193 11,981 1.8 51,224 38,147 34.3
Corporate and Other (23,421 ) (58,442 ) (59.9 ) (70,867 ) (124,295 ) (43.0 )
151,231 91,090 66.0 611,118 311,605 96.1

(1) See “FINANCIAL MEASURES AND RATIOS”.

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES (UNAUDITED)

For the three months ended December 31, For the year ended December 31,
(Stated in thousands of Canadian dollars, except where noted) 2023 2022 % Change 2023 2022 % Change
Revenue 446,503 453,225 (1.5 ) 1,704,265 1,436,134 18.7
Expenses:
Operating 270,303 296,716 (8.9 ) 1,030,053 988,885 4.2
General and administrative 13,741 18,958 (27.5 ) 43,451 49,496 (12.2 )
Adjusted EBITDA(1) 162,459 137,551 18.1 630,761 397,753 58.6
Adjusted EBITDA as a percentage of revenue(1) 36.4 % 30.3 % 37.0 % 27.7 %

(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
June 30 51 700 55 687
September 30 41 631 57 746
December 31 45 603 60 761
Year to date average 49 670 56 699

(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.

Canadian onshore drilling statistics:(1) 2023 2022
Precision Industry(2) Precision Industry(2)
Average number of active land rigs for quarters ended:
March 31 69 221 63 205
June 30 42 117 37 113
September 30 57 188 59 199
December 31 64 181 66 187
Year to date average 58 177 56 176

(1) Canadian operations only.
(2) Baker Hughes rig counts.

Revenue from Contract Drilling Services was $447 million, largely consistent with 2022, while Adjusted EBITDA increased 18% to $162 million. The increase in Adjusted EBITDA was primarily due to higher day rates and international activity, partially offset by lower North American drilling activity.

Drilling rig utilization days (drilling days plus move days) in the U.S. were 4,138, 25% lower than 2022. Drilling rig utilization days in Canada were 5,909, approximately 3% lower than 2022. The movement in utilization days in both the U.S. and Canada was consistent with changes in industry activity. Our international drilling rig utilization days increased to 693, a 26% improvement from 2022, as we reactivated rigs in the Middle East under long-term contracts.

Revenue per utilization day in the U.S. increased 10% from 2022 and was primarily the result of higher fleet average day rates, idle but contracted rig revenue and cost recoveries, partially offset by lower turnkey revenue. We recognized revenue from idle but contracted rigs and turnkey activity of US$7 million and nil, respectively, as compared with nil and US$4 million in 2022. Drilling rig revenue per utilization day in Canada increased 16% due to higher average day rates and cost recoveries. Our international revenue per utilization day for the quarter remained consistent with 2022.

In the U.S., 53% of utilization days were generated from rigs under term contract as compared with 59% in 2022. In Canada, 40% of our utilization days were generated from rigs under term contract, compared with 20% in 2022.

U.S. operating costs per utilization day increased 9% from 2022 and was primarily due to higher rig operating costs, repairs and maintenance, recoverable costs and the impact of fixed costs being spread over fewer activity days. Our Canadian operating costs per utilization day increased 9% as compared with 2022 and was due to higher field wages and recoverable costs, partially offset by lower repairs and maintenance.

Our general and administrative expenses decreased $5 million as compared with 2022 and was primarily the result of lower share-based compensation.

During the fourth quarter, we added seven Canadian drilling rigs and 11 U.S. drilling rigs to our fleet and decommissioned 20 Canadian and seven U.S. legacy drilling rigs. As at December 31, 2023, we had a global drilling rig fleet of 214, comprised of 104 rigs in the U.S., 97 rigs in Canada and 13 rigs in the Middle East.

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES (UNAUDITED)

(Stated in thousands of Canadian dollars, For the three months ended December 31, For the year ended December 31,
except where noted) 2023 2022 % Change 2023 2022 % Change
Revenue 62,459 59,250 5.4 240,716 187,171 28.6
Expenses:
Operating 48,297 45,462 6.2 181,622 141,827 28.1
General and administrative 1,969 1,807 9.0 7,870 7,197 9.4
Adjusted EBITDA(1) 12,193 11,981 1.8 51,224 38,147 34.3
Adjusted EBITDA as a percentage of revenue(1) 19.5 % 20.2 % 21.3 % 20.4 %
Well servicing statistics:
Number of service rigs (end of period) 183 135 35.6 183 135 35.6
Service rig operating hours 56,683 49,368 14.8 201,627 170,362 18.4
Service rig operating hour utilization 38 % 40 % 42 % 42 %

(1) See “FINANCIAL MEASURES AND RATIOS”.

Completion and Production Services revenue increased to $62 million, an increase of $3 million from 2022. Our increased revenue was due to higher well service rates and activity. Our 2023 service rig operating hours increased 15% compared with 2022. Completion and Production Services generated 3% of its revenue from U.S. operations compared with 9% in 2022.

Operating costs as a percentage of revenue were 77%, consistent with 2022. As compared to 2022, our general and administrative expenses increased 9%, primarily due to overhead charges associated with the CWC acquisition.

Adjusted EBITDA was $12 million, consistent with 2022.

SEGMENT REVIEW OF CORPORATE AND OTHER (UNAUDITED)

Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had negative Adjusted EBITDA of $23 million as compared with negative $58 million in 2022. Our improved Adjusted EBITDA was due to lower share-based compensation, partially offset by $4 million in transaction costs and severance.

OTHER ITEMS (UNAUDITED)

Share-based Incentive Compensation Plans

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

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

For the three months ended December 31, For the year ended December 31,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Cash settled share-based incentive plans 11,972 75,438 32,063 133,240
Equity settled share-based incentive plans 697 2,531 427
Total share-based incentive compensation plan expense 12,669 75,438 34,594 133,667
Allocated:
Operating 2,765 18,913 9,497 33,607
General and Administrative 9,904 56,525 25,097 100,060
12,669 75,438 34,594 133,667

Cash settled share-based compensation for the quarter was $12 million as compared with $75 million in 2022. The lower expense in 2023 was primarily due to lower share price performance as compared with 2022.

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

As at December 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

Net finance charges were $19 million, a decrease of $4 million compared with 2022 and was the result of lower outstanding long-term debt. Interest charges on our U.S. dollar-denominated long-term debt were US$12 million ($17 million) as compared with US$15 million ($21 million) in 2022.

Income Tax

Income tax recovery for the quarter was $69 million as compared with an expense of $9 million in 2022. During the fourth quarter of 2023, we recorded a deferred income tax asset of $73 million for the expected future use of certain Canadian operating losses. We continue to not recognize deferred income tax assets for certain international locations.

CWC Acquisition

We completed our acquisition of CWC Energy Services Corp. on November 8, 2023 for cash of $14 million and the issuance of 947,807 common shares for total consideration of $89 million plus the assumption of $61 million of long-term debt. We recorded a gain on this acquisition of $26 million. We accounted for the acquisition as a business combination and used the acquisition method to record the net assets and liabilities assumed at fair value. Our preliminary purchase price allocation was based on management’s best estimate of fair values of CWC’s assets and liabilities as at the transaction date of November 8, 2023. If within one year of the transaction date new information is obtained regarding facts and circumstances as of the transaction date that adjust these fair values, the purchase price allocation will be revised.

With this acquisition, we substantially increased the size and scale of our Canadian well servicing operations and expanded our geographic footprint into complementary regions. We added 62 marketable service rigs to our fleet along with experienced crews and field personnel and operating facilities. We also added 18 high-quality drilling rigs to our fleet, including seven drilling rigs in Canada and 11 drilling rigs in the U.S. The addition of the U.S. drilling rigs expanded our operations into Wyoming, further diversifying our serviceable U.S. basins.

The integration of CWC’s service and drilling rig business is largely complete and we continue to realize operating synergies from the acquisition with approximately $12 million of the expected $20 million annualized synergies realized to date. The acquired operations, equipment, crews and field personnel further support our High Performance, High Value service offering. As we integrated operations, we successfully minimized customer disruptions, while maintaining our industry-leading safety standards and High Performance, High Value operations.

LIQUIDITY AND CAPITAL RESOURCES (UNAUDITED)

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

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

Liquidity

Amount Availability Used for Maturity
Senior Credit Facility (secured)
US$447 million (extendible, revolving term credit facility with US$353 million accordion feature) Nil drawn and US$56 million in outstanding letters of credit General corporate purposes June 18, 2025
Real estate credit facilities (secured)
US$8 million Fully drawn General corporate purposes November 19, 2025
$16 million Fully drawn General corporate purposes March 16, 2026
$10 million Fully drawn General corporate purposes June 30, 2028
Operating facilities (secured)
$40 million Undrawn, except $20 million in outstanding letters of credit Letters of credit and general corporate purposes
US$15 million Undrawn Short-term working capital requirements
Demand letter of credit facility (secured)
US$40 million Undrawn, except US$28 million in
outstanding letters of credit
Letters of credit
Unsecured senior notes (unsecured)
US$273 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

During the quarter, we reduced debt by $25 million primarily from the redemption of US$26 million principal amount of our 2026 unsecured senior notes for an aggregate purchase price of $35 million, offset by the assumption of CWC’s $10 million Canadian Real Estate Facility.

As at December 31, 2023, we had $929 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%.

CWC Acquisition

We acquired $61 million of long-term debt obligations comprised of a $51 million syndicated loan and a $10 million Canadian Real Estate Facility. Upon closing, the syndicated loan was fully repaid and cancelled.

The Canadian Real Estate Facility matures in June 2028 and is secured by real properties in Alberta, Canada. Principal plus interest payments are due monthly, based on a 22-year amortization period with any unpaid principal and accrued interest due at maturity. Interest is calculated using a CORRA rate plus margin.

In addition, we acquired an interest rate swap agreement to exchange floating rate interest payments for fixed rate interest payments. Accordingly, we pay a fixed rate of approximately 4.7%.

Consistent with our existing Canadian Real Estate Credit Facility, the facility contains certain affirmative and negative covenants and events of default, customary for these types of transactions. Additionally, we must maintain financial covenants in accordance with the Senior Credit Facility, described below, as of the last day of each period of four consecutive fiscal quarters. In the event the Senior Credit Facility expires, is cancelled or is terminated, financial covenants in effect at that time shall remain in place for the remaining duration of the facility.

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, and consolidated interest coverage ratio of at least 2.5:1. For purposes of calculating the leverage ratio, consolidated senior debt only includes secured indebtedness. The Senior Credit Facility limits the redemption and repurchase of junior debt subject to a pro forma senior net leverage covenant test of less than or equal to 1.75:1.

The Senior Credit Facility matures on June 18, 2025.

Unsecured Senior Notes

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

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

Covenants (Unaudited)

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

Covenant At December 31, 2023
Senior Credit Facility
Consolidated senior debt to consolidated covenant EBITDA(1) < 2.50 0.07
Consolidated covenant EBITDA to consolidated interest expense > 2.50 6.92
Real Estate Credit Facilities
Consolidated covenant EBITDA to consolidated interest expense > 2.50 6.92

(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 December 31, For the year ended December 31,
2023 2022 2023 2022
Canada-U.S. foreign exchange rates
Average 1.36 1.36 1.35 1.30
Closing 1.32 1.36 1.32 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 (Unaudited)

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 December 31, For the year ended December 31,
2023 2022 2023 2022
Net earnings (loss) – basic 146,722 3,483 289,244 (34,293 )
Effect of share options and other equity compensation plans 5,373 9,235
Net earnings (loss) – diluted 152,095 3,483 298,479 (34,293 )

For the three months ended December 31, For the year ended December 31,
(Stated in thousands) 2023 2022 2023 2022
Weighted average shares outstanding – basic 14,084 13,538 13,754 13,546
Effect of share options and other equity compensation plans 1,425 4 1,533
Weighted average shares outstanding – diluted 15,509 13,542 15,287 13,546


QUARTERLY FINANCIAL SUMMARY (UNAUDITED)

(Stated in thousands of Canadian dollars, except per share amounts) 2023
Quarters ended March 31 June 30 September 30 December 31
Revenue 558,607 425,622 446,754 506,871
Adjusted EBITDA(1) 203,219 142,093 114,575 151,231
Net earnings 95,830 26,900 19,792 146,722
Net earnings per basic share 7.02 1.97 1.45 10.42
Net earnings per diluted share 5.57 1.63 1.45 9.81
Funds provided by operations(1) 159,653 136,959 91,608 145,189
Cash provided by operations 28,356 213,460 88,500 170,255

(Stated in thousands of Canadian dollars, except per share amounts) 2022
Quarters ended March 31 June 30 September 30 December 31
Revenue 351,339 326,016 429,335 510,504
Adjusted EBITDA(1) 36,855 64,099 119,561 91,090
Net earnings (loss) (43,844 ) (24,611 ) 30,679 3,483
Net earnings (loss) per basic share (3.25 ) (1.81 ) 2.26 0.27
Net earnings (loss) per diluted share (3.25 ) (1.81 ) 2.03 0.27
Funds provided by operations(1) 29,955 60,373 81,327 111,339
Cash provided by (used in) operations (65,294 ) 135,174 8,142 159,082

(1) See “FINANCIAL MEASURES AND RATIOS”.

FINANCIAL MEASURES AND RATIOS (UNAUDITED)

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 taxes, loss (gain) on investments and other assets, gain on acquisition, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, loss on asset decommissioning, gain on asset disposals, and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings (Loss) and our reportable operating segment disclosures, is a useful measure because it gives an indication of the results 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.

The most directly comparable financial measure is net earnings (loss).

For the three months ended December 31, For the year ended December 31,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Adjusted EBITDA by segment:
Contract Drilling Services 162,459 137,551 630,761 397,753
Completion and Production Services 12,193 11,981 51,224 38,147
Corporate and Other (23,421 ) (58,442 ) (70,867 ) (124,295 )
Adjusted EBITDA 151,231 91,090 611,118 311,605
Depreciation and amortization 78,734 71,373 297,557 279,035
Gain on asset disposals (8,883 ) (7,774 ) (24,469 ) (29,926 )
Loss on asset decommissioning 9,592 9,592
Foreign exchange (773 ) (84 ) (1,667 ) 1,278
Finance charges 19,468 23,519 83,414 87,813
Gain on repurchase of unsecured notes (137 )
Gain on acquisition (25,761 ) (25,761 )
Loss (gain) on investments and other assets 735 (8,714 ) 6,810 (12,452 )
Incomes taxes (68,603 ) 9,287 (23,465 ) 20,150
Net earnings (loss) 146,722 3,483 289,244 (34,293 )

Funds Provided by (Used in) Operations We believe funds provided by (used in) operations, as reported in our Condensed Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital changes, which is primarily made up of highly liquid balances.

The most directly comparable financial measure is cash provided by (used in) operations.

Net Capital Spending We believe net capital spending is a useful measure as it provides an indication of our primary investment activities.

The most directly comparable financial measure is cash provided by (used in) investing activities.

Net capital spending is calculated as follows:

For the three months ended December 31, For the year ended December 31,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Capital spending by spend category
Expansion and upgrade 24,459 12,699 63,898 63,305
Maintenance, infrastructure and intangibles 54,388 44,610 162,851 120,945
78,847 57,309 226,749 184,250
Proceeds on sale of property, plant and equipment (3,117 ) (5,165 ) (23,841 ) (37,198 )
Net capital spending 75,730 52,144 202,908 147,052
Business acquisitions 646 28,646 10,200
Proceeds from sale of investments and other assets (10,013 )
Purchase of investments and other assets 61 8 5,343 617
Receipt of finance lease payments (191 ) (255 )
Changes in non-cash working capital balances (18,619 ) (6,573 ) (11,845 ) (13,454 )
Cash used in investing activities 57,627 45,579 214,784 144,415

Working Capital We define working capital as current assets less current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.

Working capital is calculated as follows:

December 31, December 31,
(Stated in thousands of Canadian dollars) 2023 2022
Current assets 510,881 470,670
Current liabilities 365,642 410,029
Working capital 145,239 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 Earnings (Loss), provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.
Long-term debt to long-term debt plus equity We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total shareholders’ equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage.
Net Debt to Adjusted EBITDA We believe that the Net Debt (long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations.
Supplementary Financial Measures
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.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

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

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

  • our strategic priorities for 2024;
  • our capital expenditures, free cash flow allocation and debt reduction plan for 2024;
  • anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2024;
  • the average number of term contracts in place for 2024;
  • customer adoption of AlphaTM technologies and EverGreenTM suite of environmental solutions;
  • timing and amount of accretive cash flow from acquired drilling and well servicing assets;
  • anticipated North American LNG export capacity;
  • potential commercial opportunities and rig contract renewals; and
  • our future debt reduction plans.

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

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

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

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

Readers are cautioned that the foregoing 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 release 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.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars) December 31, 2023 December 31, 2022
ASSETS
Current assets:
Cash $ 54,182 $ 21,587
Accounts receivable 421,427 413,925
Inventory 35,272 35,158
Total current assets 510,881 470,670
Non-current assets:
Income tax recoverable 682 1,602
Deferred tax assets 73,662 455
Property, plant and equipment 2,338,088 2,303,338
Intangibles 17,310 19,575
Right-of-use assets 63,438 60,032
Finance lease receivables 5,003
Investments and other assets 9,971 20,451
Total non-current assets 2,508,154 2,405,453
Total assets $ 3,019,035 $ 2,876,123
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 342,382 $ 392,053
Income taxes payable 3,026 2,991
Current portion of lease obligations 17,386 12,698
Current portion of long-term debt 2,848 2,287
Total current liabilities 365,642 410,029
Non-current liabilities:
Share-based compensation 25,122 60,133
Provisions and other 7,140 7,538
Lease obligations 57,124 52,978
Long-term debt 914,830 1,085,970
Deferred tax liabilities 73,515 28,946
Total non-current liabilities 1,077,731 1,235,565
Shareholders’ equity:
Shareholders’ capital 2,365,129 2,299,533
Contributed surplus 75,086 72,555
Deficit (1,012,029 ) (1,301,273 )
Accumulated other comprehensive income 147,476 159,714
Total shareholders’ equity 1,575,662 1,230,529
Total liabilities and shareholders’ equity $ 3,019,035 $ 2,876,123


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

Three Months Ended December 31, Year Ended December 31,
(Stated in thousands of Canadian dollars, except per share amounts) 2023 2022 2023 2022
Revenue $ 506,871 $ 510,504 $ 1,937,854 $ 1,617,194
Expenses:
Operating 316,509 340,207 1,204,548 1,124,601
General and administrative 39,131 79,207 122,188 180,988
Earnings before income taxes, loss (gain) on investments and other assets, gain on acquisition, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, loss on asset decommissioning, gain on asset disposals, and depreciation and amortization 151,231 91,090 611,118 311,605
Depreciation and amortization 78,734 71,373 297,557 279,035
Gain on asset disposals (8,883 ) (7,774 ) (24,469 ) (29,926 )
Loss on asset decommissioning 9,592 9,592
Foreign exchange (773 ) (84 ) (1,667 ) 1,278
Finance charges 19,468 23,519 83,414 87,813
Gain on repurchase of unsecured senior notes (137 )
Gain on acquisition (25,761 ) (25,761 )
Loss (gain) on investments and other assets 735 (8,714 ) 6,810 (12,452 )
Earnings (loss) before income taxes 78,119 12,770 265,779 (14,143 )
Income taxes:
Current 486 1,799 4,494 4,362
Deferred (69,089 ) 7,488 (27,959 ) 15,788
(68,603 ) 9,287 (23,465 ) 20,150
Net earnings (loss) $ 146,722 $ 3,483 $ 289,244 $ (34,293 )
Net earnings (loss) per share:
Basic $ 10.42 $ 0.27 $ 21.03 $ (2.53 )
Diluted $ 9.81 $ 0.27 $ 19.53 $ (2.53 )


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

Three Months Ended December 31, Year Ended December 31,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Net earnings (loss) $ 146,722 $ 3,483 $ 289,244 $ (34,293 )
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency (36,755 ) (32,809 ) (33,433 ) 106,669
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt 22,679 23,388 21,195 (81,735 )
Comprehensive income (loss) $ 132,646 $ (5,938 ) $ 277,006 $ (9,359 )


CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended December 31, Year Ended December 31,
(Stated in thousands of Canadian dollars) 2023 2022 2023 2022
Cash provided by (used in):
Operations:
Net earnings (loss) $ 146,722 $ 3,483 $ 289,244 $ (34,293 )
Adjustments for:
Long-term compensation plans (2,541 ) 25,247 6,659 60,094
Depreciation and amortization 78,734 71,373 297,557 279,035
Gain on asset disposals (8,883 ) (7,774 ) (24,469 ) (29,926 )
Loss on asset decommissioning 9,592 9,592
Foreign exchange (853 ) (286 ) (866 ) 638
Finance charges 19,468 23,519 83,414 87,813
Income taxes (68,603 ) 9,287 (23,465 ) 20,150
Other (9 ) 269 (229 ) 542
Loss (gain) on investments and other assets 735 (8,714 ) 6,810 (12,452 )
Gain on acquisition (25,761 ) (25,761 )
Gain on repurchase of unsecured senior notes (137 )
Income taxes paid (708 ) (240 ) (3,103 ) (3,263 )
Income taxes recovered 17 14 24 24
Interest paid (3,335 ) (4,972 ) (83,037 ) (85,678 )
Interest received 614 133 1,176 310
Funds provided by operations 145,189 111,339 533,409 282,994
Changes in non-cash working capital balances 25,066 47,743 (32,838 ) (45,890 )
170,255 159,082 500,571 237,104
Investments:
Purchase of property, plant and equipment (78,582 ) (57,309 ) (224,960 ) (184,250 )
Purchase of intangibles (265 ) (1,789 )
Proceeds on sale of property, plant and equipment 3,117 5,165 23,841 37,198
Proceeds from sale of investments and other assets 10,013
Business acquisitions (646 ) (28,646 ) (10,200 )
Purchase of investments and other assets (61 ) (8 ) (5,343 ) (617 )
Receipt of finance lease payments 191 255
Changes in non-cash working capital balances 18,619 6,573 11,845 13,454
(57,627 ) (45,579 ) (214,784 ) (144,415 )
Financing:
Issuance of long-term debt 162,649 144,889
Repayments of long-term debt (86,699 ) (132,163 ) (375,237 ) (250,749 )
Repurchase of share capital (17,004 ) (29,955 ) (10,010 )
Issuance of common shares from the exercise of options 3,671 9,833
Lease payments (3,010 ) (1,948 ) (9,423 ) (7,134 )
(106,713 ) (130,440 ) (251,966 ) (113,171 )
Effect of exchange rate changes on cash (798 ) (1,524 ) (1,226 ) 1,481
Increase (decrease) in cash 5,117 (18,461 ) 32,595 (19,001 )
Cash, beginning of period 49,065 40,048 21,587 40,588
Cash, end of period $ 54,182 $ 21,587 $ 54,182 $ 21,587


CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(Stated in thousands of Canadian dollars) Shareholders’
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Income
Deficit Total
Equity
Balance at January 1, 2023 $ 2,299,533 $ 72,555 $ 159,714 $ (1,301,273 ) $ 1,230,529
Net earnings for the period 289,244 289,244
Other comprehensive loss for the period (12,238 ) (12,238 )
Acquisition share consideration 75,588 75,588
Settlement of Executive Performance and Restricted Share Units 19,206 19,206
Share repurchases (29,955 ) (29,955 )
Redemption of non-management directors share units 757 757
Share-based compensation expense 2,531 2,531
Balance at December 31, 2023 $ 2,365,129 $ 75,086 $ 147,476 $ (1,012,029 ) $ 1,575,662

(Stated in thousands of Canadian dollars) Shareholders’
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Income
Deficit Total
Equity
Balance at January 1, 2022 $ 2,281,444 $ 76,311 $ 134,780 $ (1,266,980 ) $ 1,225,555
Net loss for the period (34,293 ) (34,293 )
Other comprehensive income for the period 24,934 24,934
Share options exercised 14,016 (4,183 ) 9,833
Share repurchases (10,010 ) (10,010 )
Share-based compensation reclassification 14,083 (219 ) 13,864
Share-based compensation expense 646 646
Balance at December 31, 2022 $ 2,299,533 $ 72,555 $ 159,714 $ (1,301,273 ) $ 1,230,529


2023 FOURTH QUARTER AND YEAR-END RESULTS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on Tuesday, February 6, 2024.

To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions.

https://register.vevent.com/register/BIbb9becf4f3494c3fa2f6293fa7e871e7

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision’s website for 12 months.

https://edge.media-server.com/mmc/p/x5wzqtp3

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as AlphaTM that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreenTM suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

For further information, please contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com


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