CALGARY, Alberta, Jan. 06, 2022 — Precision Drilling Corporation (“Precision” or “the Company”) (TSX:PD; NYSE:PDS) provides a series of announcements including: 1) An introduction to its capital allocation framework through 2025; 2) 2021 debt reduction and year-end liquidity updates; and 3) Operations update for drilling activity, Alpha™ technologies and EverGreen™ solutions.

Capital Allocation Framework Through 2025

Precision’s debt reduction plans will continue with the goal of repaying over $400 million in debt over the next four years and reaching a sustained Net Debt to Adjusted EBITDA ratio of below 1.5 times. At the end of 2025, Precision expects to have reduced debt by well over $1 billion since 2018. In addition to debt reduction targets through 2025, Precision plans to allocate 10% to 20% of free cash flow before debt principal repayments toward the return of capital to shareholders. Precision will continue to support its High Performance, High Value strategy by investing in routine fleet maintenance, Alpha™ technologies, EverGreen™ solutions and contracted Super Series rig upgrades as market conditions and customer demand warrant.

2021 Debt Repayment and Liquidity Update

Precision reduced total debt by $115 million in 2021, exceeding the midpoint of its annual debt reduction goal of $100 million to $125 million. Since the beginning of 2018, Precision has paid down approximately $665 million of debt. As of December 31, 2021, Precision’s outstanding debt obligations included:

• US$118 million – Senior Credit Facility due June 18, 2025
• US$348 million – 7.125% senior notes due January 15, 2026
• US$400 million – 6.875% senior notes due June 15, 2029

In addition, Precision has approximately US$25 million of real estate credit facilities due in 2025 and 2026. Precision’s run rate cash interest expense to start 2022 is expected to be approximately $75 million. The Company ended 2021 with over $530 million of total liquidity including a cash balance of approximately $40 million and revolver availability.

Operations Update

Precision continues to experience increased demand for drilling services, Alpha™ technologies and EverGreen™ solutions into 2022.

Drilling Activity

In the fourth quarter of 2021, Precision’s average active rig count was 52 for Canada, 45 for the U.S., and six internationally. As of January 6, 2022, Precision has 66 active rigs in Canada and 50 active rigs in the U.S., representing increases of 38% and 61%, respectively, from the same date in 2021. Precision continues to have six rigs active internationally.

For the first quarter of 2022, Precision expects its Canadian average drilling activity to be up approximately 40% compared with 2021, while average U.S. activity is expected to be up approximately 60% year over year with our active rig count continuing to trend higher through the next several quarters.

Alpha™

Precision exited the year with 47 AC Super Triple Alpha-rigs equipped with our AlphaAutomation™ platform, a 26% increase from the beginning of 2021. Our fourth quarter paid AlphaApp™ days increased 50% compared with the third quarter of 2021 and 440% compared to the fourth quarter of 2020. Precision added four new Alpha™ customers in the fourth quarter.

EverGreen™

Precision’s EverGreen™ suite of environmental solutions expects three Battery Energy Storage System deployments in the first quarter with several additional pending commitments by mid-year. In addition, by the end of the first quarter, we expect to have eight Integrated Power & Emissions Monitoring Systems deployed as our customers are expressing keen interest in establishing a real-time wellsite Greenhouse Gas (GHG) footprint and gaining insight into the correlation between power demand, fuel consumption and resulting GHG emissions throughout the well construction process. Capturing and analyzing a pool of data across different rigs, well profiles, engine types and geographic areas, will meaningfully improve both Precision’s and its customers understanding of the variability of land drilling GHG emissions and help operate power generating equipment with optimal fuel consumption and carbon footprint efficiency.

CFO Quote

Precision’s CFO, Carey Ford stated: “Precision achieved its 2021 debt reduction target, despite incurring approximately $50 million of debt increases or calls on cash resulting from debt refinancings and activity-driven increases in capital expenditures and working capital throughout the year. We expect to continue to generate strong free cash flow over the next several years by maximizing our operating leverage in an increasing activity environment, bolstered by Precision’s global scale, high-quality, digitally-enabled Super Series fleet and lean fixed cost structure. In addition to continued debt reduction progress and disciplined high-return investments in our rig fleet, we believe Precision’s existing debt structure and reduced interest expense position the Company to increase shareholder value through allocating a higher percentage of free cash flow to the return of capital to shareholders.”

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. 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.”

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

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

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

• anticipated future activity levels;
• anticipated demand for drilling, Alpha™ and EverGreen™ services;
• anticipated cash interest expense;
• anticipated free cash flow;
• anticipated capital spending plans; and
• our future debt reduction and shareholder capital return 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:

• the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets;
• the success of our response to the COVID-19 global pandemic;
• 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; 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;
• the success of our response to the COVID-19 global pandemic;
• 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 GHG 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, 2020, 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 news 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.

For further information, please contact:

Carey Ford, Senior Vice President and Chief Financial Officer
713.435.6100
Precision Drilling Corporation
800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com

CALGARY, Alberta, Oct. 21, 2021 — 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 Adjusted EBITDA (earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, gain on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Covenant EBITDA, Operating Earnings (Loss), Funds Provided by (Used in) Operations 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 “Non-GAAP Measures” later in this news release.

Precision Drilling announces 2021 third quarter financial results:

• Adjusted EBITDA (See “NON-GAAP MEASURES”) of $45 million. Excluding the impact of share-based compensation charges our Adjusted EBITDA was $59 million.
• Revenue of $254 million was an increase of 54% compared with the third quarter of 2020.
• Net loss of $38 million or $2.86 per share compared with a net loss of $28 million or $2.08 per share in the third quarter of 2020.
• Generated cash and funds provided by operations (see “NON-GAAP MEASURES”) of $22 million and $34 million, respectively.
• Third quarter ending cash balance was $57 million, with available liquidity of $500 million.
• Third quarter and year to date debt reduction of $8 million and $60 million, respectively.
• Third quarter capital expenditures were $20 million.
• Recognized the Canadian government’s Canada Emergency Wage Subsidy (CEWS) program assistance of $6 million.

Precision’s President and CEO Kevin Neveu stated:

“We believe current industry fundamentals are providing the most promising backdrop for our business that we have experienced in almost a decade. Strong oil and natural gas prices, a significantly improved Canadian market structure and rapidly declining drilled but uncompleted well inventories all point to higher drilling activity in our core markets. Although we are likely in the early innings, our firm bookings and current customer inquiries indicate substantially stronger demand for our services and improved fleet utilization as this rebound continues.”

“Our third quarter Adjusted EBITDA of $59 million, excluding share-based compensation, is a result of our continued focus on strict cost discipline, growing our Alpha revenue base and realizing improved spot pricing in our North American operations. Our results have begun to reflect the considerable operating leverage of Precision Drilling, although we expect the positive impact to be more pronounced in the coming quarters with increasing activity.”

“Our Alpha suite of digital technologies continues to act as both the tip of the spear with new customer relationships and as a means to strengthen existing customer relationships with retention levels of nearly 100% for Alpha customers over the past two years. We currently have 65 AC Super Triple rigs active in North America and nearly 40 of these rigs are running Alpha at commercial rates. During the quarter, we increased utilization days of AlphaAutomation, AlphaApps and AlphaAnalytics by 8%, 36% and 4%, respectively, compared to Q2. We continue to see our performance, consistency and scalability of Alpha as key competitive differentiators for Precision.”

“In the U.S., during the quarter, activity levels nearly doubled from the third quarter last year and increased 6% sequentially. We generated normalized average drilling day rate increases of approximately $700 and we expect this trend will continue. The higher daily operating costs experienced during the quarter were primarily a result of preparation for increased activity in the fourth quarter and certain mobilization costs which will be recovered over the next several months on contracted rigs. Our current active rig count in the U.S. is 45 rigs, slightly lower than our prior guidance due to some customer delays and the decision to decline certain opportunities based on lower price expectations by customers.”

“In Canada, our drilling activity was nearly triple our activity in the third quarter of 2020 and our 51 average active rigs during the quarter represented the highest third quarter average activity since 2018. We are operating 61 rigs today and believe the improved Canadian market structure is due to increased crude takeaway capacity, lower differentials and substantially improved customer cash flows allowing our customers to self-fund drilling programs while continuing to generate strong shareholder returns. Additionally, we expect the prospects of LNG exports materializing on the medium term will bolster the outlook for Canadian drilling activity.”

“We increased our 2021 capital spending plan to $74 million to support our improved activity outlook in North America. The increase primarily relates to advanced drill pipe purchases to take advantage of vendor discounts and lower cost vendor inventories that were secured early in the quarter and will address increased drill pipe needs into next year.”

“Our Completion and Production Services division continues to deliver strong operational and financial results. In particular, Precision Well Servicing is successfully differentiating itself by delivering high quality crews and High Performance, certified equipment to customer projects, while the broader industry is navigating the dual challenges of labor availability and equipment quality. For the quarter, the division generated Adjusted EBITDA of approximately $5 million.”

“Our international drilling operations continue at a steady pace with 6 rigs active in Kuwait and the Kingdom of Saudi Arabia. During the quarter, we received extension notifications for two Kuwait rig contracts, each for one-year. Regional bidding activity is robust, and we see opportunities to activate several of our idle rigs in the region early next year and are confident in our likelihood of success.”

“During the third quarter, we introduced our Evergreen suite of environmental and emission-reduction focused products and services to complement our Super Series drilling rigs and Alpha digital offering. Recently, we successfully deployed our first Evergreen hybrid battery storage, natural gas and low emission power generating system to a Super Triple drilling rig in the Canadian market. The system reduces GHG emissions and fuel costs, helping our customer achieve their GHG emission-reduction targets and improving their well construction economics. Later this year, we expect to deploy three real-time combustion fuel monitoring packages, using AlphaAnalytics to determine precise baseline emission data. These accurate baselines will enable us to make customer-specific recommendations to further reduce rig-generated GHG emissions.”

“We remain focused on strict cost discipline and debt reduction and are on track to meet our debt reduction goal of $100 million to $125 million for 2021. In the quarter, cash from operations was $22 million, funds from operations were $34 million and debt reduction was $8 million with year to date debt reduction of $60 million. We expect cash flow to be strong in the fourth quarter as we have only $3 million in cash interest payments due and expect minimal working capital increases. With no senior note maturities until 2026 and approximately $500 million of available liquidity, our balance sheet remains in excellent shape to support our business activities and allow for further deleveraging through cash flow,” concluded Mr. Neveu.

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts)	2021				2020				% Change				2021				2020				% Change
Revenue		253,813				164,822				54.0				691,645				734,065				(5.8	)
Adjusted EBITDA(1)		45,408				47,771				(4.9	)			128,891				208,140				(38.1	)
Operating earnings (loss)(1)		(20,762	)			(26,785	)			(22.5	)			(76,033	)			(23,375	)			225.3
Net loss		(38,032	)			(28,476	)			33.6				(150,050	)			(82,620	)			81.6
Cash provided by operations		21,871				41,950				(47.9	)			79,512				221,381				(64.1	)
Funds provided by operations(1)		33,525				27,489				22.0				89,562				135,445				(33.9	)
Capital spending:
Expansion and upgrade		5,998				–			n.m.					15,881				13,764				15.4
Maintenance and infrastructure		13,502				3,211				320.5				32,310				24,859				30.0
Intangibles		–				–			n.m.					–				57				(100.0	)
Proceeds on sale		(4,476	)			(5,705	)			(21.5	)			(10,390	)			(16,416	)			(36.7	)
Net capital spending		15,024				(2,494	)			(702.4	)			37,801				22,264				69.8
Net loss per share:
Basic		(2.86	)			(2.08	)			37.4				(11.27	)			(6.02	)			87.2
Diluted		(2.86	)			(2.08	)			37.4				(11.27	)			(6.02	)			87.2

(1) See “NON-GAAP MEASURES.”
n.m. Not meaningful

Operating Highlights

	For the three months ended September 30,												For the nine months ended September 30,
	2021				2020				% Change				2021				2020				% Change
Contract drilling rig fleet		227				227				–				227				227				–
Drilling rig utilization days:
U.S.		3,785				1,957				93.4				10,315				9,684				6.5
Canada		4,648				1,613				188.2				10,963				8,216				33.4
International		552				559				(1.3	)			1,638				1,974				(17.0	)
Revenue per utilization day:
U.S.(1) (US$)		20,331				28,334				(28.2	)			20,904				26,335				(20.6	)
Canada (Cdn$)		19,427				21,430				(9.3	)			20,295				21,593				(6.0	)
International (US$)		52,277				54,887				(4.8	)			53,095				54,631				(2.8	)
Operating cost per utilization day:
U.S. (US$)		15,120				16,037				(5.7	)			14,639				14,727				(0.6	)
Canada (Cdn$)		13,189				12,924				2.1				13,204				13,940				(5.3	)
Service rig fleet		123				123				–				123				123				–
Service rig operating hours		32,244				15,599				106.7				93,777				54,666				71.5

(1) Includes revenue from idle but contracted rig days.

Financial Position

(Stated in thousands of Canadian dollars, except ratios)	September 30, 2021				December 31, 2020
Working capital(1)		120,259				175,423
Cash		57,096				108,772
Long-term debt		1,162,841				1,236,210
Total long-term financial liabilities		1,241,708				1,304,162
Total assets		2,720,415				2,898,878
Long-term debt to long-term debt plus equity ratio		0.48				0.47

(1) See “NON-GAAP MEASURES.”

Summary for the three months ended September 30, 2021:

• Revenue for the third quarter was $254 million, 54% higher than in 2020 and was the result of increased drilling and service rig activity, partially offset by lower drilling day rates. Drilling rig utilization days increased by 93% in the U.S. and 188% in Canada and well service activity increased 107% as compared with the third quarter of 2020. Our international drilling activity decreased slightly from 2020 due to the expiration of a drilling contract.
• Adjusted EBITDA (see “NON-GAAP MEASURES”) for the quarter was $45 million, $2 million lower than 2020. Our Adjusted EBITDA as a percentage of revenue was 18% this quarter, compared with 29% in the comparative quarter. Our current quarter Adjusted EBITDA was negatively impacted by higher share-based compensation charges due to our increased share price and lower average day rates, partially offset by improved activity. Excluding the impact of $13 million of share-based compensation charges, our third quarter Adjusted EBITDA was $59 million as compared with the prior year Adjusted EBITDA excluding the impact of $4 million of share-based compensation of $51 million.
• Operating loss (see “NON-GAAP MEASURES”) for the quarter was $21 million compared with $27 million in 2020.
• General and administrative expenses this quarter were $24 million, $12 million higher than in 2020 due to our increased share-based compensation charges and lower CEWS program assistance.
• Net finance charges for the quarter were $21 million, $7 million lower than in 2020 and was primarily due to reduced interest expense due to lower debt levels and lower average cost of borrowing.
• In the U.S., revenue per utilization day in the third quarter of 2021 decreased to US$20,331 compared with US$28,334 in 2020. The decrease was primarily the result of lower revenue from idle but contracted rigs, turnkey activity and lower fleet average day rates, partially offset by higher Alpha revenue. During the third quarter of 2021, we recognized revenue from idle but contracted rigs and turnkey projects of nil, as compared with US$10 million and US$2 million, respectively, in 2020. Our third quarter operating costs on a per day basis decreased to US$15,120, compared with US$16,037 in 2020, and was mainly due to lower turnkey activity. On a sequential basis, revenue per utilization day, excluding revenue from turnkey drilling and idle but contracted rigs, increased by US$692 primarily due to higher fleet average day rates, while operating costs per day increased by US$1,375 due to higher repairs and maintenance.
• In Canada, average revenue per utilization day for contract drilling rigs for the quarter was $19,427 compared with $21,430 in 2020. The lower average revenue per utilization day in 2021 was primarily due to our rig mix. Average operating costs per utilization day in Canada for the quarter increased to $13,189 compared with $12,924 in 2020. The increase was mainly due to industry wage increases, partially offset by fixed costs being spread over higher activity.
• During the quarter, we recognized CEWS program assistance of $6 million as compared with $8 million in 2020. CEWS program assistance was presented as offsets to operating and general and administrative costs of $5 million and $1 million, respectively, as compared with $6 million and $2 million in 2020.
• We realized third quarter revenue from international contract drilling of US$29 million in 2021, as compared with US$31 million in 2020. The lower revenue in 2021 was primarily due to lower day rates. The average revenue per utilization day for the quarter was US$52,277, 5% lower than in the third quarter of 2020.
• Cash and funds provided by operations (see “NON-GAAP MEASURES”) in the third quarter of 2021 were $22 million and $34 million, respectively, compared with $42 million and $27 million in 2020.
• Capital expenditures were $20 million as compared with $3 million in the third quarter of 2020. Capital spending included $6 million for expansion and upgrade capital and $14 million for the maintenance of existing assets, infrastructure spending and intangibles.
• During the third quarter of 2021, we reduced long-term debt by $8 million.

Summary for the nine months ended September 30, 2021:

• Revenue for the first nine months of 2021 was $692 million, a decrease of 6% from 2020.
• Adjusted EBITDA (see “NON-GAAP MEASURES”) for the period was $129 million, $79 million lower than 2020. Our Adjusted EBITDA was negatively impacted by lower idle but contracted rig revenue, higher share-based compensation charges due to our increased share price and lower average day rates, partially offset by improved North American activity.
• General and administrative costs were $77 million, an increase of $27 million from 2020. The increase was the result of higher share-based compensation charges.
• Net finance charges were $71 million, a decrease of $12 million from 2020 primarily due to reduced interest expense due to lower debt levels and lower average cost of borrowing, partially offset by higher amortized debt issue costs.
• Cash provided by operations was $80 million in 2021 as compared with $221 million in 2020. Funds provided by operations (see “NON-GAAP MEASURES”) in 2021 were $90 million, a decrease of $46 million from the prior year comparative period of $135 million.
• Capital expenditures were $48 million in 2021, an increase of $10 million for the same period in 2020. Capital spending in 2021 included $16 million for expansion and upgrade capital and $32 million for the maintenance of existing assets, infrastructure spending and intangibles.
• As of September 30, 2021, we have reduced long-term debt by $60 million and repurchased and cancelled 155,168 common shares for $4 million pursuant to our Normal Course Issuer Bid.

STRATEGY

Precision’s strategic priorities for 2021 are as follows:

1. Grow revenue and market share through our digital leadership position – Precision exited the third quarter with 46 AC Super Triple Alpha-rigs equipped with our AlphaAutomation platform and 16 commercialized AlphaApps. Our third quarter paid AlphaApp days increased 36% compared with the second quarter of 2021, with the increase largely driven by operational performance, additional revenue generating days and further uptake of customers fully utilizing our suite of Alpha technologies. During the quarter, Precision added four new AlphaAutomation customers and increased paid AlphaAutomation days, AlphaApp days and AlphaAnalytics days quarter-over-quarter by 8%, 36% and 4%, respectively.
2. Demonstrate operational leverage to generate free cash flow and reduce debt – In the third quarter of 2021, Precision generated $22 million of cash provided by operations (see “NON-GAAP MEASURES”) and $4 million of cash proceeds from the divestiture of non-core assets. As of September 30, 2021, we have reduced debt levels by $60 million, leaving $40 million of further debt reduction to achieve the low end of our 2021 debt reduction target of $100-$125 million. Precision exited the quarter with a cash balance of $57 million, US$161 million drawn on our US$500 million Senior Credit Facility and available liquidity of $500 million.
3. Deliver leading ESG (environmental, social and governance) performance to strengthen customer and stakeholder positioning – During the third quarter, we introduced our Evergreen suite of environmental solutions focused on emissions reduction products and services to complement our Super Series drilling rigs and our Alpha digital products. We successfully deployed our first Evergreen hybrid battery storage, natural gas and low emission power generating system to a Super Triple drilling rig in the Canadian market. The system reduces GHG emissions and fuel costs, helping our customer achieve their GHG emission-reduction targets and improving their well construction economics. We have seen strong customer appetite in both Canada and the U.S. for hybrid battery power systems and have multiple commitments to deploy several additional systems by mid-2022. In the fourth quarter, we expect to deploy three real-time combustion fuel monitoring packages, using AlphaAnalytics to determine precise baseline emission data. These accurate baselines will enable us to make customer-specific recommendations to further reduce rig-generated GHG emissions.

OUTLOOK

The continued rise in global energy demand, sustained periods of strong commodity prices and the multi-year period of upstream underinvestment provide a promising backdrop for the oilfield services industry. At current commodity prices, we anticipate higher demand for our services and improved fleet utilization as customers look to maintain and replenish production levels as drilled but uncompleted well inventories have depleted.

In Canada, industry activity has surpassed pre-pandemic levels as takeaway capacity continues to improve, price differentials shrink and the startup of LNG exports is expected in the medium term.

Interest in our Evergreen solutions has gained momentum as customers look for meaningful solutions to achieve their emission reduction targets, and in many cases, also improve their well economics. Our suite of Alpha digital technologies will continue to be a key competitive differentiator as our predictable and repeatable drilling results deliver exceptional value to our customers by reducing risks, time and well construction costs.

The Government of Canada’s $1.7 billion well site abandonment and rehabilitation program has supported industry activity levels and provided thousands of jobs throughout Western Canada. The program runs through to the end of 2022 with government funds provided in stages. Our well servicing business continues to capture opportunities because of our scale, operational performance and strong safety record. During the third quarter of 2021, our abandonment activity remained strong and we expect this momentum to continue through to the end of the program in 2022.

During 2020, the Government of Canada introduced the CEWS program to subsidize a portion of employee wages for Canadian employers whose businesses have been adversely affected by COVID-19. For the three months ended September 30, 2021, we recognized $6 million (2020 – $8 million) in CEWS program assistance, which is presented as offsets to operating and general and administrative expenses of $5 million (2020 – $6 million) and $1 million (2020 – $2 million), respectively. Unless extended, the CEWS program is expected to end in the fourth quarter of 2021.

Contracts

Year to date in 2021 we have entered into 28 term contracts. The following chart outlines the average number of drilling rigs under contract by quarter as of October 20, 2021. For those quarters ending after September 30, 2021, this chart represents the minimum number of long-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 contracts.

		Average for the quarter ended 2020																Average for the quarter ended 2021
		Mar. 31				June 30				Sept. 30				Dec. 31				Mar. 31				June 30				Sept. 30				Dec. 31
Average rigs under term contract as of October 20, 2021:
U.S.			41				32				26				24				21				24				22				22
Canada			5				4				3				4				6				6				7				7
International			8				8				6				6				6				6				6				6
Total			54				44				35				34				33				36				35				35

The following chart outlines the average number of drilling rigs that we had under contract for 2020 and the average number of rigs we have under contract as of October 20, 2021.

		Average for the year ended
		2020				2021
Average rigs under term contract as of October 20, 2021:
U.S.			31				22
Canada			4				7
International			7				6
Total			42				35

In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year.

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 2020															Average for the quarter ended 2021
	Mar. 31				June 30				Sept. 30				Dec. 31				Mar. 31				June 30				Sept. 30
Average Precision active rig count:
U.S.		55				30				21				26				33				39				41
Canada		63				9				18				28				42				27				51
International		8				8				6				6				6				6				6
Total		126				47				45				60				81				72				98

According to industry sources, as of October 20, 2021, the U.S. active land drilling rig count has increased 98% from the same point last year while the Canadian active land drilling rig count increased by 110%. To date in 2021, approximately 78% of the U.S. industry’s active rigs and 56% of the Canadian industry’s active rigs were drilling for oil targets, compared with 80% for the U.S. and 54% for Canada at the same time last year.

Capital Spending

Capital spending in 2021 is expected to be $74 million and includes $51 million for sustaining, infrastructure and intangibles and $23 million for expansion and upgrades. We expect that the $74 million will be split $68 million in the Contract Drilling Services segment, $5 million in the Completion and Production Services segment and $1 million to the Corporate segment. At September 30, 2021, Precision had capital commitments of $137 million with payments expected through 2023.

SEGMENTED FINANCIAL RESULTS

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars)	2021				2020				% Change				2021				2020				% Change
Revenue:
Contract Drilling Services		226,957				150,773				50.5				613,032				682,060				(10.1	)
Completion and Production Services		28,143				14,443				94.9				81,354				53,631				51.7
Inter-segment eliminations		(1,287	)			(394	)			226.6				(2,741	)			(1,626	)			68.6
		253,813				164,822				54.0				691,645				734,065				(5.8	)
Adjusted EBITDA:(1)
Contract Drilling Services		55,384				51,594				7.3				163,118				236,940				(31.2	)
Completion and Production Services		5,479				3,945				38.9				17,533				5,960				194.2
Corporate and Other		(15,455	)			(7,768	)			99.0				(51,760	)			(34,760	)			48.9
		45,408				47,771				(4.9	)			128,891				208,140				(38.1	)

(1) See “NON-GAAP MEASURES.”

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted)	2021				2020				% Change				2021				2020				% Change
Revenue		226,957				150,773				50.5				613,032				682,060				(10.1	)
Expenses:
Operating		164,521				93,669				75.6				429,036				417,496				2.8
General and administrative		7,052				5,151				36.9				20,878				20,004				4.4
Restructuring		–				359				(100.0	)			–				7,620				(100.0	)
Adjusted EBITDA(1)		55,384				51,594				7.3				163,118				236,940				(31.2	)
Depreciation		62,751				70,675				(11.2	)			191,084				220,461				(13.3	)
Gain on asset disposals		(3,035	)			(2,684	)			13.1				(5,355	)			(8,617	)			(37.9	)
Operating earnings (loss)(1)		(4,332	)			(16,397	)			(73.6	)			(22,611	)			25,096				(190.1	)
Operating earnings (loss)(1) as a percentage of revenue		(1.9	)%			(10.9	)%							(3.7	)%			3.7	%

(1) See “NON-GAAP MEASURES.”

United States onshore drilling statistics:(1)	2021								2020
	Precision				Industry(2)				Precision				Industry(2)
Average number of active land rigs for quarters ended:
March 31		33				378				55				764
June 30		39				437				30				378
September 30		41				485				21				241
Year to date average		38				433				35				461

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

Canadian onshore drilling statistics:(1)	2021								2020
	Precision				Industry(2)				Precision				Industry(2)
Average number of active land rigs for quarters ended:
March 31		42				145				63				196
June 30		27				72				9				25
September 30		51				151				18				47
Year to date average		40				123				30				89

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

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

	For the three months ended September 30,												For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted)	2021				2020				% Change				2021				2020
Revenue		28,143				14,443				94.9				81,354				53,631				51.7
Expenses:
Operating		21,188				9,872				114.6				59,703				42,056				42.0
General and administrative		1,476				626				135.8				4,118				3,020				36.4
Restructuring		–				–				n.m.				–				2,595				(100.0	)
Adjusted EBITDA(1)		5,479				3,945				38.9				17,533				5,960				194.2
Depreciation		4,004				4,014				(0.2	)			11,859				12,416				(4.5	)
Gain on asset disposals		(95	)			(236	)			(59.7	)			(551	)			(1,237	)			(55.5	)
Operating earnings (loss)(1)		1,570				167				840.1				6,225				(5,219	)			(219.3	)
Operating earnings (loss)(1) as a percentage of revenue		5.6	%			1.2	%							7.7	%			(9.7	)%
Well servicing statistics:
Number of service rigs (end of period)		123				123				–				123				123				–
Service rig operating hours		32,244				15,599				106.7				93,777				54,666				71.5
Service rig operating hour utilization		28	%			14	%							28	%			16	%

(1) See “NON-GAAP MEASURES.”
n.m. Not meaningful.

SEGMENT REVIEW OF CORPORATE AND OTHER

Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had negative Adjusted EBITDA (see “NON-GAAP MEASURES”) of $15 million as compared with $8 million in the third quarter of 2020. Our Adjusted EBITDA was negatively impacted by higher share-based compensation costs as a result of our improved share price performance in 2021 and lower CEWS program assistance, partially offset by lower restructuring charges. During the quarter, CEWS program assistance offset general and administrative costs by $0.4 million as compared with $1 million in 2020. In the third quarter of 2020, we incurred $2 million of restructuring charges.

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 2020 Annual Report.

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

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars)	2021				2020				2021				2020
Cash settled share-based incentive plans		11,839				971				46,537				(50	)
Equity settled share-based incentive plans:
Executive PSU		1,468				2,434				3,639				8,128
Stock option plan		34				160				199				714
Total share-based incentive compensation plan expense (recovery)		13,341				3,565				50,375				8,792
Allocated:
Operating		3,272				740				11,437				1,754
General and Administrative		10,069				2,825				38,938				7,038
		13,341				3,565				50,375				8,792

Cash settled share-based compensation expense increased by $11 million in the current quarter primarily due to our increasing share price and the reclassification of Executive PSUs as a cash settled share-based incentive plan. Our equity settled share-based compensation expense for the third quarter of 2021 decreased by $1 million as fewer Executive PSUs were outstanding as compared with 2020.

Finance Charges

Net finance charges were $21 million as compared with $28 million in the third quarter of 2020. Interest charges on our U.S. denominated long-term debt in the third quarter of 2021 were US$15 million ($19 million) as compared with US$18 million ($24 million) in 2020.

Income Tax

Income tax recovery for the quarter was $4 million as compared with an income tax expense of $1 million in 2020. During the third quarter of 2021 and 2020, we did not recognize deferred tax assets on certain Canadian and international operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Amount		Availability		Used for		Maturity
Senior credit facility (secured)
US$500 million1 (extendible, revolving term credit facility with US$300 million accordion feature)		US$161 million drawn and US$31 million in outstanding letters of credit		General corporate purposes		June 18, 20251
Real estate credit facilities (secured)
US$10 million		Fully drawn		General corporate purposes		November 19, 2025
$19 million		Fully drawn		General corporate purposes		March 16, 2026
Operating facilities (secured)
$40 million		Undrawn, except $7 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$30 million		Undrawn, except US$3 million in outstanding letters of credit		Letters of credit
Unsecured senior notes (unsecured)
US$348 million – 7.125%		Fully drawn		Debt redemption and repurchases		January 15, 2026
US$400 million – 6.875%		Fully drawn		Debt redemption and repurchases		January 15, 2029

(1) US$53 million expires on November 21, 2023.

At September 30, 2021, we had $1,183 million outstanding under our Senior Credit Facility, Real Estate Credit Facilities and unsecured senior notes as compared with $1,250 million at December 31, 2020.

The current blended cash interest cost of our debt is approximately 6.3%.

Covenants

At September 30, 2021, we were in compliance with the covenants of our Senior Credit Facility and Real Estate Credit Facilities.

	Covenant		At September 30, 2021
Senior Credit Facility
Consolidated senior debt to consolidated covenant EBITDA(1)	< 2.50			1.33
Consolidated covenant EBITDA to consolidated interest expense	> 1.75			1.96
Real Estate Credit Facilities
Consolidated covenant EBITDA to consolidated interest expense	> 1.75			1.96

(1) For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness.

Average shares outstanding

The following table reconciles the weighted average shares outstanding used in computing basic and diluted net loss per share:

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands)	2021				2020				2021				2020
Weighted average shares outstanding – basic		13,304				13,724				13,319				13,736
Effect of stock options and other equity compensation plans		–				–				–				–
Weighted average shares outstanding – diluted		13,304				13,724				13,319				13,736

QUARTERLY FINANCIAL SUMMARY

(Stated in thousands of Canadian dollars, except per share amounts)		2020				2021
Quarters ended		December 31				March 31				June 30				September 30
Revenue			201,688				236,473				201,359				253,813
Adjusted EBITDA(1)			55,263				54,539				28,944				45,408
Net loss			(37,518	)			(36,106	)			(75,912	)			(38,032	)
Net loss per basic and diluted share			(2.74	)			(2.70	)			(5.71	)			(2.86	)
Funds provided by operations(1)			35,282				43,430				12,607				33,525
Cash provided by operations			4,737				15,422				42,219				21,871

(Stated in thousands of Canadian dollars, except per share amounts)		2019				2020
Quarters ended		December 31				March 31				June 30				September 30
Revenue			372,301				379,484				189,759				164,822
Adjusted EBITDA(1)			105,006				101,904				58,465				47,771
Net loss			(1,061	)			(5,277	)			(48,867	)			(28,476	)
Net loss per basic and diluted share			(0.08	)			(0.38	)			(3.56	)			(2.08	)
Funds provided by operations(1)			75,779				81,317				26,639				27,489
Cash provided by operations			74,981				74,953				104,478				41,950

(1) See “NON-GAAP MEASURES.”

NON-GAAP MEASURES

In this release we reference non-GAAP (Generally Accepted Accounting Principles) measures. Adjusted EBITDA, Covenant EBITDA, Operating Earnings (Loss), Funds Provided by (Used in) Operations and Working Capital are terms used by us to assess performance as we believe they provide useful supplemental information to investors. 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.

Adjusted EBITDA

We believe that Adjusted EBITDA (earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on assets disposals and depreciation and amortization), as reported in the Interim Consolidated Statement of Net Loss, 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.

Covenant EBITDA

Covenant EBITDA, as defined in our Senior Credit Facility agreement, is used in determining the Corporation’s compliance with its covenants. Covenant EBITDA differs from Adjusted EBITDA by the exclusion of bad debt expense, restructuring costs, certain foreign exchange amounts and the deduction of cash lease payments incurred after December 31, 2018.

Operating Earnings (Loss)

We believe that operating earnings (loss) is a useful measure because it provides an indication of the results of our principal business activities before consideration of how those activities are financed and the impact of foreign exchange and taxation. Operating earnings is calculated as follows:

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars)	2021				2020				2021				2020
Revenue		253,813				164,822				691,645				734,065
Expenses:
Operating		184,422				103,147				485,998				457,926
General and administrative		23,983				11,954				76,756				49,938
Restructuring		–				1,950				–				18,061
Depreciation and amortization		69,431				77,588				211,148				241,626
Gain on asset disposals		(3,261	)			(3,032	)			(6,224	)			(10,111	)
Operating earnings (loss)		(20,762	)			(26,785	)			(76,033	)			(23,375	)
Foreign exchange		464				1,161				104				2,924
Finance charges		20,639				27,613				70,783				83,276
Gain on investments and other assets		(327	)			–				(327	)			–
Loss (gain) on repurchase of unsecured notes		–				(27,971	)			9,520				(29,942	)
Loss before income taxes		(41,538	)			(27,588	)			(156,113	)			(79,633	)

Funds Provided By (Used In) Operations

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

Working Capital

We define working capital as current assets less current liabilities as reported on the Interim Consolidated Statement of Financial Position.

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 2021;
• our capital expenditure plans for 2021;
• anticipated activity levels in 2021;
• anticipated demand for our drilling rigs;
• the average number of term contracts in place for 2021;
• anticipated cash savings and liquidity;
• customer adoption of Alpha technologies;
• 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:

• the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets;
• the success of our response to the COVID-19 global pandemic;
• 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; 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;
• the success of vaccinations for COVID-19 worldwide;
• 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, 2020, 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)		September 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash		$	57,096			$	108,772
Accounts receivable			249,553				207,209
Inventory			25,770				26,282
Total current assets			332,419				342,263
Non-current assets:
Deferred tax assets			1,098				1,098
Right-of-use assets			52,337				55,168
Property, plant and equipment			2,301,873				2,472,683
Intangibles			25,087				27,666
Investments and other assets			7,601				–
Total non-current assets			2,387,996				2,556,615
Total assets		$	2,720,415			$	2,898,878
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	198,129			$	150,957
Income taxes payable			654				3,702
Current portion of lease obligations			11,152				11,285
Current portion of long-term debt			2,225				896
Total current liabilities			212,160				166,840
Non-current liabilities:
Share-based compensation			25,430				11,507
Provisions and other			6,934				7,563
Lease obligations			46,503				48,882
Long-term debt			1,162,841				1,236,210
Deferred tax liabilities			12,600				21,236
Total non-current liabilities			1,254,308				1,325,398
Shareholders’ equity:
Shareholders’ capital			2,281,444				2,285,738
Contributed surplus			76,753				72,915
Deficit			(1,239,644	)			(1,089,594	)
Accumulated other comprehensive income			135,394				137,581
Total shareholders’ equity			1,253,947				1,406,640
Total liabilities and shareholders’ equity		$	2,720,415			$	2,898,878

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts)		2021				2020				2021				2020
Revenue		$	253,813			$	164,822			$	691,645			$	734,065
Expenses:
Operating			184,422				103,147				485,998				457,926
General and administrative			23,983				11,954				76,756				49,938
Restructuring			–				1,950				–				18,061
Earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, gain on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization			45,408				47,771				128,891				208,140
Depreciation and amortization			69,431				77,588				211,148				241,626
Gain on asset disposals			(3,261	)			(3,032	)			(6,224	)			(10,111	)
Foreign exchange			464				1,161				104				2,924
Finance charges			20,639				27,613				70,783				83,276
Gain on investments and other assets			(327	)			–				(327	)			–
Loss (gain) on repurchase of unsecured senior notes			–				(27,971	)			9,520				(29,942	)
Loss before income taxes			(41,538	)			(27,588	)			(156,113	)			(79,633	)
Income taxes:
Current			890				2,946				2,462				6,121
Deferred			(4,396	)			(2,058	)			(8,525	)			(3,134	)
			(3,506	)			888				(6,063	)			2,987
Net loss		$	(38,032	)		$	(28,476	)		$	(150,050	)		$	(82,620	)
Net loss per share:
Basic		$	(2.86	)		$	(2.08	)		$	(11.27	)		$	(6.02	)
Diluted		$	(2.86	)		$	(2.08	)		$	(11.27	)		$	(6.02	)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
(Stated in thousands of Canadian dollars)		2021				2020				2021				2020
Net loss		$	(38,032	)		$	(28,476	)		$	(150,050	)		$	(82,620	)
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency			33,364				(36,384	)			(9,182	)			49,313
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt			(24,544	)			29,404				6,995				(34,832	)
Comprehensive loss		$	(29,212	)		$	(35,456	)		$	(152,237	)		$	(68,139	)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
(Stated in thousands of Canadian dollars)		2021				2020				2021				2020
Cash provided by (used in):
Operations:
Net loss		$	(38,032	)		$	(28,476	)		$	(150,050	)		$	(82,620	)
Adjustments for:
Long-term compensation plans			7,887				3,106				28,688				8,727
Depreciation and amortization			69,431				77,588				211,148				241,626
Gain on asset disposals			(3,261	)			(3,032	)			(6,224	)			(10,111	)
Foreign exchange			415				1,293				1,437				2,447
Finance charges			20,639				27,613				70,783				83,276
Income taxes			(3,506	)			888				(6,063	)			2,987
Other			2				(142	)			(562	)			(905	)
Gain on investments and other assets			(327	)			–				(327	)			–
Loss (gain) on repurchase of unsecured senior notes			–				(27,971	)			9,520				(29,942	)
Income taxes paid			(1,134	)			(2,137	)			(5,200	)			(6,085	)
Income taxes recovered			44				1,228				47				1,228
Interest paid			(18,804	)			(22,644	)			(63,982	)			(75,687	)
Interest received			171				175				347				504
Funds provided by operations			33,525				27,489				89,562				135,445
Changes in non-cash working capital balances			(11,654	)			14,461				(10,050	)			85,936
			21,871				41,950				79,512				221,381
Investments:
Purchase of property, plant and equipment			(19,500	)			(3,211	)			(48,191	)			(38,623	)
Purchase of intangibles			–				–				–				(57	)
Proceeds on sale of property, plant and equipment			4,476				5,705				10,390				16,416
Purchase of investments and other assets			(3,000	)			–				(3,000	)			–
Changes in non-cash working capital balances			500				(1,367	)			3,213				(6,773	)
			(17,524	)			1,127				(37,588	)			(29,037	)
Financing:
Issuance of long-term debt			–				123,029				696,341				128,059
Repayments of long-term debt			(8,209	)			(158,921	)			(769,668	)			(204,386	)
Repurchase of share capital			–				–				(4,294	)			(5,259	)
Debt issuance costs			344				–				(9,450	)			–
Debt amendment fees			(3	)			(22	)			(913	)			(690	)
Lease payments			(1,633	)			(1,987	)			(4,963	)			(5,612	)
Changes in non-cash working capital balances			(1,829	)			–				–				–
			(11,330	)			(37,901	)			(92,947	)			(87,888	)
Effect of exchange rate changes on cash			642				(2,516	)			(653	)			(1,372	)
Increase (decrease) in cash			(6,341	)			2,660				(51,676	)			103,084
Cash, beginning of period			63,437				175,125				108,772				74,701
Cash, end of period		$	57,096			$	177,785			$	57,096			$	177,785

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, 2021		$	2,285,738			$	72,915			$	137,581			$	(1,089,594	)		$	1,406,640
Net loss for the period			–				–				–				(150,050	)			(150,050	)
Other comprehensive loss for the period			–				–				(2,187	)			–				(2,187	)
Share repurchases			(4,294	)			–				–				–				(4,294	)
Share-based compensation reclassification			–				(2,349	)			–				–				(2,349	)
Share-based compensation expense			–				6,187				–				–				6,187
Balance at September 30, 2021		$	2,281,444			$	76,753			$	135,394			$	(1,239,644	)		$	1,253,947

(Stated in thousands of Canadian dollars)		Shareholders’ Capital				Contributed Surplus				Accumulated Other Comprehensive Income				Deficit				Total Equity
Balance at January 1, 2020		$	2,296,378			$	66,255			$	134,255			$	(969,456	)		$	1,527,432
Net loss for the period			–				–				–				(82,620	)			(82,620	)
Other comprehensive income for the period			–				–				14,481				–				14,481
Share repurchases			(5,259	)			–				–				–				(5,259	)
Redemption of non-management director DSUs			677				(502	)			–				–				175
Share-based compensation reclassification			–				(1,498	)			–				–				(1,498	)
Share-based compensation expense			–				8,842				–				–				8,842
Balance at September 30, 2020		$	2,291,796			$	73,097			$	148,736			$	(1,052,076	)		$	1,461,553

THIRD QUARTER 2021 EARNINGS 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, October 21, 2021.

The conference call dial in numbers are 1-844-515-9176 or 614-999-9312.

A live webcast of the conference call will be accessible on Precision’s website at www.precisiondrilling.com by selecting “Investor Relations”, then “Webcasts & Presentations.”

An archived version of the webcast will be available for approximately 60 days. An archived recording of the conference call will be available approximately one hour after the completion of the call until October 25, 2021 by dialing 855-859-2056 or 404-537-3406, passcode 8393532.

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. 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:

Carey Ford, Senior Vice President and Chief Financial Officer
713.435.6100

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

CALGARY, Alberta, Oct. 04, 2021 — Precision Drilling Corporation (“Precision”) intends to release its 2021 third quarter results before the market opens on Thursday, October 21, 2021 and has scheduled a conference call and webcast to begin promptly at 12:00 Noon MT (2:00 p.m. ET) on the same day.

The conference call dial in numbers are 844-515-9176 or 614-999-9312 (International) or a live webcast is accessible on our website at www.precisiondrilling.com.

An archived version of the webcast will be available for approximately 60 days. An archived recording of the conference call will be available approximately one hour after the completion of the call until October 25, 2021 by dialing 855-859-2056 or 404-537-3406, passcode 8393532.

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. 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:

Carey Ford
Senior Vice President & Chief Financial Officer
713.435.6100

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

CALGARY, Alberta, Aug. 20, 2021 — Precision Drilling Corporation (“Precision” or the “Company”) (TSX:PD; NYSE:PDS) announced today that the Toronto Stock Exchange (the “TSX“) has approved its intention to implement a normal course issuer bid (“NCIB“) through the facilities of the TSX, the New York Stock Exchange (the “NYSE“) and alternative trading platforms for a portion of its common shares (“Common Shares“). The NCIB effectively renews the existing NCIB, which is scheduled to terminate on August 26, 2021. Precision believes the NCIB continues to represent another tool for the Company to enhance the value of its underlying shares.

Pursuant to the renewed NCIB, the Company has been authorized by the TSX to acquire up to a maximum of 1,317,158 Common Shares, or approximately 10% of the public float as of August 13, 2021, for cancellation. Purchases under the NCIB may commence on August 27, 2021, and will terminate no later than August 26, 2022, or such earlier time as the Company completes its purchases pursuant to the NCIB or provides notice of termination.

Purchases under the NCIB will be made through the facilities of the TSX and the NYSE or alternative trading platforms and in accordance with applicable regulatory requirements at a price per Common Share representative of the market price at the time of acquisition. The number of Common Shares that can be purchased pursuant to the NCIB is subject to a current daily maximum of 35,942 Common Shares (which is equal to 25% of the average daily trading volume of 143,769 on the TSX for the six full calendar months ending July 31, 2021), subject to the Company’s ability to make one block purchase of Common Shares per calendar week that exceeds such limits. All Common Shares purchased under the NCIB will be cancelled after their purchase. The Company intends to fund the purchases out of its available resources.

Pursuant to its existing NCIB, under which the Company has approval from the TSX to purchase up to 1,199,883 Common Shares (on a post-consolidation basis) for the period of August 27, 2020, to August 26, 2021, the Company has purchased 420,550 Common Shares (on a post-consolidation basis) on the TSX, NYSE and alternative trading platforms at a weighted average purchase price of CAD$24.62 per Common Share.

The Company intends to enter into an automatic securities purchase plan effective August 27, 2021, under which its broker may purchase Common Shares in connection with the NCIB. The plan will contain a prearranged set of criteria in accordance with which its broker may make Common Share purchases. These strict parameters enable the purchase of Common Shares during times when it would ordinarily not be permitted due to self-imposed blackout periods, insider trading rules or otherwise. Such plan is adopted in accordance with applicable Canadian securities laws and the requirements of Rule 10b5-1 under the
U.S. Securities Exchange Act of 1934, as amended.

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. 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.”

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

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

In particular, forward-looking information and statements include, but are not limited to the funding of purchases under the NCIB and the entering in to of an automatic securities purchase plan and advantages of the NCIB.

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:

• the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets;
• the success of our response to the COVID-19 global pandemic;
• 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; 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;
• the success of vaccinations for COVID-19 worldwide;
• 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 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, 2020, 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 news 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.

For further information, please contact:

Carey Ford
Senior Vice President and Chief Financial Officer
713.435.6100

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

CALGARY, Alberta, July 23, 2021 — Cathedral Energy Services Ltd. (TSX:CET) (“Cathedral”) and Precision Drilling Corporation (TSX: PD, NYSE: PDS) (“Precision”) are pleased to announce the closing of Cathedral’s acquisition of Precision’s directional drilling business (the “Transaction”) for a purchase price of $6,350,000. The Transaction includes operating assets and personnel of Precision’s directional drilling business (including its operations facility in Nisku, Alberta), along with an additional $3 million cash investment by Precision to support growth and expansion of Cathedral, including continuing the buildout of RapidFire^TM measurement-while-drilling guidance systems and nDurance^TM drilling motors. Additionally, the Transaction is expected to enhance margins as expenses related to rental equipment used by Precision are replaced with proprietary Cathedral tools.

As part of the Transaction, Cathedral and Precision have entered into a strategic marketing alliance (the “Alliance”), which is expected to produce new U.S. and Canadian customer opportunities for Cathedral as well as potential integrated service offerings for customers. The Alliance is expected to support both parties’ technology initiatives and lead the future of directional drilling. Precision’s market leading Alpha^TM digital technologies (AlphaApps, AlphaAutomation and AlphaAnalytics) are focused on automation and drilling performance and pair well with Cathedral’s premium downhole equipment and directional drilling expertise.

The parties have also entered into an investor rights agreement pursuant to which, among other things, Precision was granted the right to nominate a member to Cathedral’s board of directors and certain customary participation rights in respect of future sales of securities by Cathedral. Precision will maintain such rights for so long as it continues to hold 10% or more of Cathedral’s common shares (calculated on a partially diluted basis giving effect to the exercise or conversion of any convertible securities which may be held by Precision).

Precision nominee Shuja Goraya, who is currently employed by Precision as their Chief Technology Officer, has been appointed to the Cathedral board of directors. Based in Houston, Texas, Mr. Goraya has a Bachelor of Engineering degree and has worked for over 25 years in the energy services sector, most recently with Schlumberger Limited. Mr. Goraya’s technical expertise and extensive directional drilling background will be a strong complement to Cathedral’s board.

The purchase price was satisfied through the issuance by Cathedral to Precision of 13,400,000 common shares of Cathedral (the “Consideration Shares”) along with warrants to purchase an additional 2,000,000 common shares of Cathedral at a price of $0.60 per common share within a two-year period after closing. In addition to a 4-month statutory hold period on the Consideration Shares, the parties have agreed to contractual restrictions on resale as follows: 25% of the Consideration Shares are restricted until January 22, 2022; a further 25% of the Consideration Shares are restricted until July 22, 2022; and a further 50% of the Consideration Shares are restricted until July 22, 2023, subject to certain exceptions.

As stated by Tom Connors, Cathedral President & CEO, “This strategic combination and alliance with Precision initiates some necessary consolidation and cements our position as one of the larger directional drilling contractors in the Canadian market space. It further provides for a strong platform for growth into the future as we harness the combined strength of Precision’s brand, market presence, operational footprint, and Alpha^TM suite of digital technologies with the proprietary technology, focused experience and expertise of Cathedral. As the industry continues to evolve and drive efficiency through technology we are also excited about the capacity and potential, through this partnership, to develop directional specific apps and technology that further differentiate our offering and help set our performance apart in the marketplace. Additionally, the integrated service and technological offering enabled by this partnership has the potential to provide a greener future for the provision of directional drilling services as we advance the development and delivery of a reduced footprint in the field through reliable “remote” products and technology.” On the addition of Mr. Goraya to the board, Mr. Connors added, “Mr. Goraya is well known and highly regarded in the industry, we are excited to welcome his perspective and experience to our board and look forward to his contribution to the further growth and evolution of Cathedral.”

President and Chief Executive Officer of Precision, Kevin Neveu, noted “Our investment and strategic partnership with Cathedral allow for the combined strengths of both entities to further advance directional specific technologies and provide a differentiated service offering. The combination of Cathedral’s people, technology, and industry-specific focus with our operating platform and Alpha^TM suite of digital technologies will drive further value for our customers as we continue to push efficiency benchmarks within the industry.”

Precision did not hold any securities of Cathedral prior to the transaction. Post-closing, Precision owns approximately 17.5% of Cathedral’s issued and outstanding common shares on a non-diluted basis and approximately 19.6% on a partially diluted basis giving effect to the exercise of the warrants. Precision may increase or decrease its investment, directly or indirectly, in Cathedral from time to time, depending on market conditions or any other relevant factors.

FORWARD-LOOKING INFORMATION

This news release contains statements and information that, to the extent that they are not historical fact, may constitute “forward-looking information” within the meaning of applicable securities legislation. Forward-looking information is typically, but not always, identified by the use of words such as “proposed”, “expected”, “will” and similar words, including negatives thereof, or other similar expressions concerning matters that are not historical facts. Forward-looking information in this news release includes, but is not limited to, statements regarding: the expected benefits of the strategic marketing alliance, use of cash received as part of the transaction, expected market share growth and expanded offering to Precision’s former directional drilling customers and other statements relating to the expected operation of and benefit from the assets and business purchased in the Transaction going forward. Such forward-looking information is based on various assumptions and factors that may prove to be incorrect, including, but not limited to, factors and assumptions with respect to: the ability of Cathedral to integrate the acquired business into Cathedral’s business; and the ability of Cathedral and Precision to successfully implement their strategic plans and initiatives and whether such strategic plans and initiatives will yield the expected benefits. Although Cathedral and Precision believe that the assumptions and factors on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Cathedral and Precision can give no assurance that it will prove to be correct or that any of the events anticipated by such forward-looking information will transpire or occur, or if any of them do so, what benefits Cathedral and Precision will derive there from. Actual results could differ materially from those currently anticipated due to a number of factors and risks including, but not limited to: conditions in the oil and gas market; fluctuations in market conditions, including in securities markets; economic factors; and the impact of general economic conditions and the COVID-19 pandemic in Canada and the United States. Additional information regarding risks and uncertainties relating to Cathedral’s business are contained under the heading “Risk Factors” in the Company’s annual information form for the financial year ended December 31, 2020 and Cathedral’s other public filings, copies of which are available under Cathedral’s profile on SEDAR at www.sedar.com. Additional information regarding risks and uncertainties relating to Precision’s business are contained under the heading “Risk Factors” in Precision’s annual information form for the financial year ended December 31, 2020 and Precision’s other public filings, copies of which are available under Precision’s profile on SEDAR at www.sedar.com. The forward-looking information included in this news release is made as of the date of this news release and Cathedral and Precision do not undertake an obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise, except as required by applicable law.

ABOUT CATHEDRAL

Cathedral Energy Services Ltd., based in Calgary, Alberta is incorporated under the Business Corporations Act (Alberta) and operates in the U.S. under Cathedral Energy Services Inc. Cathedral is publicly traded on the Toronto Stock Exchange under the symbol “CET”. Cathedral is a trusted partner to North American energy companies requiring high performance directional drilling services. We work in partnership with our customers to tailor our equipment and expertise to meet their specific geographical and technical needs. Our experience, technologies and responsive personnel enable our customers to achieve higher efficiencies and lower project costs. For more information, visit www.cathedralenergyservices.com.

ABOUT PRECISION

Precision is a leading provider of safe and High Performance, High Value services to the oil and gas industry. Precision provides customers with access to an extensive fleet of Super Series drilling rigs supported by an industry leading technology platform that offers innovative drilling solutions to deliver efficient, predictable and repeatable results through service differentiation. Precision also 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. Precision is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Requests for further information should be directed to:

Tom Connors, President & Chief Executive Officer

Ian Graham, Chief Financial Officer

Cathedral Energy Services Ltd.

6030 3 Street S.E.

Calgary, Alberta T2H 1K2

Telephone: 403.265.2560, Fax: 403.262.4682

www.cathedralenergyservices.com

Carey Ford, Senior Vice President and Chief Financial Officer

Precision Drilling Corporation

800, 525 – 8th Avenue S.W.

Calgary, Alberta, Canada T2P 1G1

Telephone: 713.435.6100

www.precisiondrilling.com

For a copy of the early warning report filed by Precision under applicable Canadian securities legislation in connection with its acquisition of Cathedral securities, please go to Cathedral’s profile on the SEDAR website (www.sedar.com) or contact Precision as set forth above.

CALGARY, Alberta, July 22, 2021 — 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 Adjusted EBITDA, Covenant EBITDA, Operating Earnings (Loss), Funds Provided by (Used in) Operations 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 “Non-GAAP Measures” later in this news release.

Precision Drilling announces 2021 second quarter financial results:

• Revenue of $201 million was an increase of 6% compared with the second quarter of 2020.
• Net loss of $76 million or $5.71 per share compared with a net loss of $49 million or $3.56 per share in the second quarter of 2020.
• Earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization (Adjusted EBITDA, see “NON-GAAP MEASURES”) of $29 million was 50% lower than the second quarter of 2020. Excluding the impact of $26 million of share-based compensation charges, our second quarter Adjusted EBITDA was $55 million.
• Generated cash and funds provided by operations (see “NON-GAAP MEASURES”) of $42 million and $13 million, respectively.
• Second quarter ending cash balance was $63 million.
• Extended the maturity of the Senior Credit Facility to June 18, 2025.
• Issued US$400 million of 6.875% unsecured senior notes due in 2029 and redeemed in full our 2023 and 2024 unsecured senior notes.
• Second quarter and year to date debt reduction of $23 million and $52 million, respectively.
• Second quarter capital expenditures were $20 million.
• Recognized the Canadian government’s Canada Emergency Wage Subsidy (CEWS) program assistance of $9 million.

Precision’s President and CEO Kevin Neveu stated:

“Precision delivered higher than expected second quarter revenue of $201 million, supported by increased activity and improved pricing resulting from strengthening energy fundamentals and higher oil and natural gas prices. In addition, field margins were better than expected in our contract drilling business with strict cost control, Alpha technology revenues, and the benefit of operating leverage from higher than expected activity. Adjusted EBITDA excluding the $26 million share-based compensation accrual was $55 million, significantly higher than our expectations, and reflective of our focus on cost management and maximizing our operating leverage.”

“Our Canadian operations produced second quarter activity up three-fold from 2020 levels and the strength of the market continues to surprise to the upside. Currently, we are running 52 rigs, well above both our 2019 pre-pandemic levels and in-line with our 2021 first quarter activity peak. We expect to activate several more rigs over the coming weeks, and early in the third quarter, we agreed to a multi-year contract to redeploy an AC Super Triple rig from Colorado to the Montney, enhancing our leadership position in this important Canadian play. In addition to the Montney, we are experiencing increased customer demand for our Super Single rigs in heavy oil applications where our rigs deliver outstanding performance in these industrialized drilling operations. Our Canadian well service business is also experiencing a similar rebound with activity up over five-fold from July of 2020, supported by commodity prices and the Canadian well abandonment program. The outlook for the overall Canadian market over the next 12 months remains exceptionally bright.”

“In the U.S., we are experiencing growing customer demand with second quarter activity up over 30% from the same period last year and up 21% sequentially. Activity is trending in line with our expectations with 42 rigs running today, an increase from 37 at the end of the first quarter. We expect steady U.S. activity growth to continue throughout 2021 and are gaining confidence in accelerated rig additions to start 2022 as customers deploy fresh budget capital for drilling projects to address declining drilled but uncompleted well inventories.”

“Our international drilling operations remain steady with six rigs active in Kuwait and the Kingdom of Saudi Arabia. Bidding activity is trending upwards as the national oil companies plan for the relaxation of OPEC production and export limits in 2022. We continue to see opportunities to activate several of our idle rigs in the region later this year or early next year and are increasingly confident in our likelihood of success.”

“Our recent debt refinancing and revolver extension activities pushed out our debt maturities, reduced our cash interest expenses and sustained our high liquidity level with the success of the transactions reflecting capital markets and bank confidence in Precision. Importantly, the refinancing left approximately $200 million of prepayable debt, the amount we are committed to repay by the end of 2022 to achieve our goal of reducing debt by $800 million over a five-year period. Debt reduction in the quarter was $23 million and year to date we have reduced debt by $52 million. We utilized cash from operations and cash on the balance sheet to offset costs associated with our debt refinancing, including call premiums and transaction costs. We expect robust cash flow in the second half of the year with an improving business and only $22 million of cash interest expense remaining in 2021. With no senior note maturities until 2026 and approximately $500 million of available liquidity, our balance sheet remains in excellent shape to support our business activities.”

“We believe our AlphaAutomation and AlphaApps offerings crossed a tipping point with customer acceptance at the beginning of this year, and now we are finding virtually all new rig activations for our AC Super Triple rigs include our full suite of services. With quarter-over-quarter growth almost doubling our app revenue days, and a 30% increase in paid AlphaAutomation days, we are well on track to deliver on our Alpha technology strategic objective. Our customers are clearly maintaining capital discipline and are utilizing industrial scale, digital technologies and operational efficiency to drive cash flow. With this market backdrop, we expect our Alpha technology offering will continue to be attractive to our customers and increasingly necessary for our customers to achieve their goals.”

“I continue to be encouraged by the progress Precision is making on our ESG initiatives including our recently published Corporate Responsibility Report. The report details our activities and commitments to reduce our environmental footprint and GHG emissions, and improve the diversity, opportunities and experiences for our workforce and the communities where we operate. I am particularly pleased with the formation of our E-Team and S-Team, which are cross-functional teams working across Precision’s business units to develop and implement our strategies and tactics as we continue our ESG journey.”

“I would like to conclude by thanking all the employees of Precision Drilling once again for their hard work and the very good results they delivered for all of Precision’s stakeholders,” concluded Mr. Neveu.

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

	For the three months ended June 30,												For the six months ended June 30,
(Stated in thousands of Canadian dollars, except per share amounts)	2021				2020				% Change				2021				2020				% Change
Revenue		201,359				189,759				6.1				437,832				569,243				(23.1	)
Adjusted EBITDA(1)		28,944				58,465				(50.5	)			83,483				160,369				(47.9	)
Operating earnings (loss)(1)		(39,856	)			(19,189	)			107.7				(55,271	)			3,410				(1,720.9	)
Net loss		(75,912	)			(48,867	)			55.3				(112,018	)			(54,144	)			106.9
Cash provided by operations		42,219				104,478				(59.6	)			57,641				179,431				(67.9	)
Funds provided by operations(1)		12,607				26,639				(52.7	)			56,037				107,956				(48.1	)
Capital spending:
Expansion and upgrade		6,446				12,111				(46.8	)			9,883				13,764				(28.2	)
Maintenance and infrastructure		13,809				11,816				16.9				18,808				21,648				(13.1	)
Intangibles		–				–			n.m.					–				57				(100.0	)
Proceeds on sale		(2,590	)			(5,021	)			(48.4	)			(5,914	)			(10,711	)			(44.8	)
Net capital spending		17,665				18,906				(6.6	)			22,777				24,758				(8.0	)
Net loss per share:
Basic		(5.71	)			(3.56	)			60.3				(8.41	)			(3.94	)			113.5
Diluted		(5.71	)			(3.56	)			60.3				(8.41	)			(3.94	)			113.5

(1) See “NON-GAAP MEASURES.”
n.m. Not meaningful

Operating Highlights

	For the three months ended June 30,												For the six months ended June 30,
	2021				2020				% Change				2021				2020				% Change
Contract drilling rig fleet		227				227				–				227				227				–
Drilling rig utilization days:
U.S.		3,579				2,743				30.5				6,530				7,727				(15.5	)
Canada		2,497				834				199.4				6,315				6,603				(4.4	)
International		546				687				(20.5	)			1,086				1,415				(23.3	)
Revenue per utilization day:
U.S.(1) (US$)		20,497				29,370				(30.2	)			21,236				25,828				(17.8	)
Canada (Cdn$)		20,634				22,940				(10.1	)			20,935				21,633				(3.2	)
International (US$)		54,269				54,779				(0.9	)			53,512				54,529				(1.9	)
Operating cost per utilization day:
U.S. (US$)		13,745				14,172				(3.0	)			14,360				14,406				(0.3	)
Canada (Cdn$)		13,510				13,898				(2.8	)			13,216				14,196				(6.9	)
Service rig fleet		123				123				–				123				123				–
Service rig operating hours		26,630				4,702				466.4				61,533				39,067				57.5

(1) Includes revenue from idle but contracted rig days.

Financial Position

(Stated in thousands of Canadian dollars, except ratios)	June 30, 2021				December 31, 2020
Working capital(1)		115,507				175,423
Cash		63,437				108,772
Long-term debt		1,145,317				1,236,210
Total long-term financial liabilities		1,217,662				1,304,162
Total assets		2,696,309				2,898,878
Long-term debt to long-term debt plus equity ratio		0.47				0.47

(1) See “NON-GAAP MEASURES.”

Summary for the three months ended June 30, 2021:

• Revenue for the second quarter was $201 million, 6% higher than in 2020 and was the result of increased drilling and service activity, partially offset by lower drilling day rates. Drilling rig utilization days increased by 30% in the U.S. and 199% in Canada as compared with the second quarter of 2020. Our international drilling activity decreased 21% from 2020 due to the expiration of drilling contracts.
• Adjusted EBITDA (see “NON-GAAP MEASURES”) for the quarter was $29 million, $30 million lower than 2020. Our Adjusted EBITDA as a percentage of revenue was 14% this quarter, compared with 31% in the comparative quarter. Our current quarter Adjusted EBITDA was negatively impacted by higher share-based compensation charges due to our increased share price and lower average day rates, partially offset by improved activity. Excluding the impact of $26 million of share-based compensation charges, our Adjusted EBITDA was $55 million in the second quarter of 2021. See additional discussion on share-based compensation under “Other Items” later in this release.
• Operating loss (see “NON-GAAP MEASURES”) for the quarter was $40 million compared with $19 million in 2020.
• General and administrative expenses this quarter were $31 million, $13 million higher than in 2020 due to our increased share-based compensation charges and lower CEWS program assistance. Excluding share-based compensation and CEWS program assistance, our general and administrative expenses decreased by 12% as compared with the second quarter of 2020.
• In the second quarter of 2020, we incurred restructuring charges of $6 million, comprised of severance, as we aligned our cost structure to reflect reduced global activity, and certain costs associated with the shutdown of our U.S. directional drilling operations. No restructuring charges were incurred in 2021.
• Net finance charges for the quarter were $28 million, consistent with 2020. As compared with 2020, our second quarter interest charges on our long-term debt decreased by $6 million but was offset by higher debt issue costs as we accelerated the amortization of issue costs on our fully redeemed unsecured senior notes.
• In the U.S., revenue per utilization day in the second quarter of 2021 decreased to US$20,497 compared with US$29,370 in 2020. The decrease was primarily the result of lower revenue from idle but contracted rigs and lower fleet average day rates, partially offset by higher Alpha revenue. Our second quarter revenue from turnkey projects and idle but contracted rigs of US$3 million and nil, respectively, compared with US$3 million and US$16 million in 2020. Our second quarter operating costs on a per day basis decreased to US$13,745, compared with US$14,172 in 2020, and was mainly due to lower rig operating costs and lower fixed costs, partially offset by higher rig repairs and rig activations. We activated six rigs in the quarter as compared with nil in 2020. On a sequential basis, revenue per utilization day, excluding revenue from turnkey drilling and idle but contracted rigs, decreased by US$872 primarily due to lower fleet average day rates, while operating costs per day decreased by US$1,360 due to lower turnkey activity and the impact of fixed operating costs being spread over higher activity days.
• In Canada, average revenue per utilization day for contract drilling rigs for the quarter was $20,634 compared with $22,940 in 2020. The lower average revenue per utilization day in 2021 was primarily due to our rig mix. Average operating costs per utilization day in Canada for the quarter decreased to $13,510 compared with $13,898 in 2020. The decrease was mainly due to fixed costs being spread over higher activity days and lower repairs and maintenance.
• During the quarter, we recognized CEWS program assistance of $9 million, consistent with 2020. CEWS program assistance was presented as offsets to operating and general and administrative costs of $8 million and $1 million, respectively, as compared with $6 million and $3 million in 2020.
• We realized second quarter revenue from international contract drilling of US$30 million of 2021, as compared with US$38 million in 2020. The lower revenue in 2021 was primarily due to lower activity. Average revenue per utilization day for the quarter was US$54,269, consistent with 2020.
• Cash and funds provided by operations (see “NON-GAAP MEASURES”) in the second quarter of 2021 were $42 million and $13 million, respectively, compared with $104 million and $27 million in 2020.
• Capital expenditures were $20 million, $4 million lower than the second quarter of 2020. Capital spending included $6 million for expansion and upgrade capital and $14 million for the maintenance of existing assets, infrastructure spending and intangibles.
• During the second quarter of 2021, we reduced long-term debt by $23 million.

Summary for the six months ended June 30, 2021:

• Revenue for the first six months of 2021 was $438 million, a decrease of 23% from 2020.
• Operating loss (see “NON-GAAP MEASURES”) was $55 million, compared with operating earnings of $3 million in 2020. Operating results this year were negatively impacted by lower drilling activity and average day rates.
• General and administrative costs were $53 million, an increase of $15 million from 2020. The increase was the result of higher share-based compensation charges. Excluding share-based compensation and CEWS program assistance, our general and administrative costs for the first half of 2021 decreased 27% as compared with 2020.
• In the first half of 2020, we incurred restructuring charges of $16 million, comprised of severance and shutdown costs for our U.S. directional drilling operations. No restructuring charges were incurred in 2021.
• Net finance charges were $50 million, a decrease of $6 million from 2020 primarily due to a reduction in interest expense related to retired debt, partially offset by higher amortized debt issue costs.
• Cash provided by operations was $58 million in 2021 as compared with $179 million in 2020. Funds provided by operations (see “NON-GAAP MEASURES”) in the first half of 2021 were $56 million, a decrease of $52 million from the prior year comparative period of $108 million.
• Capital expenditures were $29 million for the first half of 2021, a decrease of $7 million for the same period in 2020. Capital spending for the first half of 2021 included $10 million for expansion and upgrade capital and $19 million for the maintenance of existing assets, infrastructure spending and intangibles.
• During the first half of 2021, we reduced long-term debt by $52 million and repurchased and cancelled 155,168 common shares for $4 million pursuant to our Normal Course Issuer Bid.

STRATEGY

Precision’s strategic priorities for 2021 are as follows:

1. Grow revenue and market share through our digital leadership position – Precision exited the second quarter with 44 AC Super Triple Alpha-rigs equipped with our AlphaAutomation platform and 16 commercialized AlphaApps. Our second quarter paid AlphaApp days increased 89% compared with the first quarter of 2021, with the increase largely driven by operational performance, additional revenue generating days and further uptake of customers fully utilizing our suite of Alpha technologies. During the quarter, Precision added two new AlphaAutomation customers and increased paid AlphaAutomation days, AlphaApp days and AlphaAnalytics days quarter-over-quarter by 30%, 89% and 71%, respectively.
2. Demonstrate operational leverage to generate free cash flow and reduce debt – In the second quarter of 2021, Precision generated $42 million of cash provided by operations (see “NON-GAAP MEASURES”) and $3 million of cash proceeds from the divestiture of non-core assets. We issued US$400 million of 6.875% unsecured senior notes due 2029, redeemed in full our 2023 and 2024 unsecured senior notes and extended the maturity of our Senior Credit Facility. Through these transactions, we extended our debt maturities, reduced our average cost of borrowing and increased the amount of prepayable debt under our Senior Credit Facility. As of June 30, 2021, we have reduced debt levels by $52 million, leaving $48 million of further debt reduction to achieve the low end of our 2021 debt reduction target of $100-$125 million. Precision exited the quarter with a cash balance of $63 million, US$167 million drawn on our US$500 million Senior Credit Facility and available liquidity of approximately $500 million.
3. Deliver leading ESG (environmental, social and governance) performance to strengthen customer and stakeholder positioning – On July 15, 2021, we released our second annual Corporate Responsibility Report that highlights our progress in ESG efforts and outlines our ESG strategies, focus areas and performance. Furthermore, we announced the launch of our EverGreen suite of environmental solutions, bolstering our commitment to reduce the environmental impact of oilfield operations. Our EverGreen suite of environmental solutions is comprised of our EverGreen Monitoring, EverGreen Energy, and EverGreen Fuel Cell initiatives. We remain committed to partnering with suppliers, customers, industry groups and government agencies to innovate and implement green drilling technologies. This collaborative approach, along with our position as a drilling technology leader, will continue to result in more eco-friendly drilling solutions, returns on investment and improved social perception for Precision’s customers. For additional information on our ESG initiatives and our Corporate Responsibility Report, please see our website.

OUTLOOK

The oilfield services industry outlook and customer sentiment both continue to improve as global COVID-19 vaccination rates increase, economies reopen and commodity prices strengthen. Improved fundamentals from recovering global oil demand have resulted in higher commodity prices and increased activity levels. We anticipate our customers will remain focused on capital discipline and maximize operational efficiencies. We expect these industry dynamics to accelerate the industry’s transition toward service providers with the highest performing assets and competitive digital technology offerings. Pursuit of predictable and repeatable results will further drive field application of drilling automation processes to create additional cost efficiencies and performance value for customers.

Contracts

Year to date in 2021 we have entered into 20 term contracts. The following chart outlines the average number of drilling rigs under contract by quarter as of July 21, 2021. For those quarters ending after June 30, 2021, this chart represents the minimum number of long-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 contracts.

		Average for the quarter ended 2020																Average for the quarter ended 2021
		Mar. 31				June 30				Sept. 30				Dec. 31				Mar. 31				June 30				Sept. 30				Dec. 31
Average rigs under term contract as of July 21, 2021:
U.S.			41				32				26				24				21				24				20				17
Canada			5				4				3				4				6				6				7				7
International			8				8				6				6				6				6				6				6
Total			54				44				35				34				33				36				33				30

The following chart outlines the average number of drilling rigs that we had under contract for 2020 and the average number of rigs we have under contract as of July 21, 2021.

		Average for the year ended
		2020				2021
Average rigs under term contract as of July 21, 2021:
U.S.			31				21
Canada			4				7
International			7				6
Total			42				34

In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. In most regions in the U.S. and internationally, term contracts normally generate 365 utilization days per year.

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 2020															Average for the quarter ended 2021
	Mar. 31				June 30				Sept. 30				Dec. 31				Mar. 31				June 30
Average Precision active rig count:
U.S.		55				30				21				26				33				39
Canada		63				9				18				28				42				27
International		8				8				6				6				6				6
Total		126				47				45				60				81				72

According to industry sources, as of July 21, 2021, the U.S. active land drilling rig count has increased 93% from the same point last year while the Canadian active land drilling rig count increased by 369%. To date in 2021, approximately 82% of the U.S. industry’s active rigs and 53% of the Canadian industry’s active rigs were drilling for oil targets, compared with 82% for the U.S. and 58% for Canada at the same time last year.

Capital Spending

Capital spending in 2021 is expected to be $63 million and includes $41 million for sustaining, infrastructure and intangibles and $22 million for expansion and upgrades. We expect that the $63 million will be split $59 million in the Contract Drilling Services segment, $3 million in the Completion and Production Services segment and $1 million to the Corporate segment. At June 30, 2021, Precision had capital commitments of $127 million with payments expected through 2023.

SEGMENTED FINANCIAL RESULTS

	For the three months ended June 30,												For the six months ended June 30,
(Stated in thousands of Canadian dollars)	2021				2020				% Change				2021				2020				% Change
Revenue:
Contract Drilling Services		181,256				184,738				(1.9	)			386,075				531,287				(27.3	)
Completion and Production Services		20,667				5,525				274.1				53,211				39,188				35.8
Inter-segment eliminations		(564	)			(504	)			11.9				(1,454	)			(1,232	)			18.0
		201,359				189,759				6.1				437,832				569,243				(23.1	)
Adjusted EBITDA:(1)
Contract Drilling Services		47,703				74,613				(36.1	)			107,734				185,346				(41.9	)
Completion and Production Services		4,252				(1,220	)			(448.5	)			12,054				2,015				498.2
Corporate and Other		(23,011	)			(14,928	)			54.1				(36,305	)			(26,992	)			34.5
		28,944				58,465				(50.5	)			83,483				160,369				(47.9	)

(1) See “NON-GAAP MEASURES.”

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

	For the three months ended June 30,												For the six months ended June 30,
(Stated in thousands of Canadian dollars, except where noted)	2021				2020				% Change				2021				2020				% Change
Revenue		181,256				184,738				(1.9	)			386,075				531,287				(27.3	)
Expenses:
Operating		126,394				101,498				24.5				264,515				323,827				(18.3	)
General and administrative		7,159				6,083				17.7				13,826				14,853				(6.9	)
Restructuring		–				2,544				(100.0	)			–				7,261				(100.0	)
Adjusted EBITDA(1)		47,703				74,613				(36.1	)			107,734				185,346				(41.9	)
Depreciation		63,101				74,062				(14.8	)			128,333				149,786				(14.3	)
Gain on asset disposals		(595	)			(3,091	)			(80.8	)			(2,320	)			(5,933	)			(60.9	)
Operating earnings (loss)(1)		(14,803	)			3,642				(506.5	)			(18,279	)			41,493				(144.1	)
Operating earnings (loss)(1) as a percentage of revenue		(8.2	)%			2.0	%							(4.7	)%			7.8	%

(1) See “NON-GAAP MEASURES.”

United States onshore drilling statistics:(1)	2021								2020
	Precision				Industry(2)				Precision				Industry(2)
Average number of active land rigs for quarters ended:
March 31		33				378				55				764
June 30		39				437				30				378
Year to date average		36				408				42				571

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

Canadian onshore drilling statistics:(1)	2021								2020
	Precision				Industry(2)				Precision				Industry(2)
Average number of active land rigs for quarters ended:
March 31		42				145				63				196
June 30		27				72				9				25
Year to date average		35				109				36				110

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

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

	For the three months ended June 30,												For the six months ended June 30,
(Stated in thousands of Canadian dollars, except where noted)	2021				2020				% Change				2021				2020
Revenue		20,667				5,525				274.1				53,211				39,188				35.8
Expenses:
Operating		15,125				5,558				172.1				38,515				32,184				19.7
General and administrative		1,290				915				41.0				2,642				2,394				10.4
Restructuring		–				272				(100.0	)			–				2,595				(100.0	)
Adjusted EBITDA(1)		4,252				(1,220	)			(448.5	)			12,054				2,015				498.2
Depreciation		3,854				4,119				(6.4	)			7,855				8,402				(6.5	)
Gain on asset disposals		(213	)			(262	)			(18.7	)			(456	)			(1,001	)			(54.4	)
Operating earnings (loss)(1)		611				(5,077	)			(112.0	)			4,655				(5,386	)			(186.4	)
Operating earnings (loss)(1) as a percentage of revenue		3.0	%			(91.9	)%							8.7	%			(13.7	)%
Well servicing statistics:
Number of service rigs (end of period)		123				123				–				123				123				–
Service rig operating hours		26,630				4,702				466.4				61,533				39,067				57.5
Service rig operating hour utilization		24	%			4	%							56	%			35	%

(1) See “NON-GAAP MEASURES.”

SEGMENT REVIEW OF CORPORATE AND OTHER

Our Corporate and Other segment provides support functions to our operating segments. The Corporate and Other segment had negative Adjusted EBITDA (see “NON-GAAP MEASURES”) of $23 million as compared with $15 million in the second quarter of 2020. Our Adjusted EBITDA was negatively impacted by higher share-based compensation costs as a result of our increased share price and lower CEWS program assistance. During the quarter, CEWS program assistance offset general and administrative costs by $1 million as compared with $2 million in 2020.

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 2020 Annual Report.

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

	For the three months ended June 30,								For the six months ended June 30,
(Stated in thousands of Canadian dollars)	2021				2020				2021				2020
Cash settled share-based incentive plans		24,830				5,372				34,698				(1,021	)
Equity settled share-based incentive plans:
Executive PSU		1,398				2,959				2,171				5,694
Stock option plan		34				168				165				554
Total share-based incentive compensation plan expense (recovery)		26,262				8,499				37,034				5,227
Allocated:
Operating		5,901				1,987				8,165				1,014
General and Administrative		20,361				6,512				28,869				4,213
		26,262				8,499				37,034				5,227

Cash settled share-based compensation expense increased by $19 million in the current quarter primarily due to our increasing share price and the reclassification of Executive PSUs as a cash settled share-based incentive plan. Our equity settled share-based compensation expense for the second quarter of 2021 decreased by $2 million as fewer Executive PSUs were outstanding as compared with 2020.

Finance Charges

Net finance charges were $28 million, consistent with the second quarter of 2020. Interest charges on our U.S. denominated long-term debt in the second quarter of 2021 were US$16 million ($19 million) as compared with US$19 million ($26 million) in 2020. We recognized $7 million of debt issue costs as compared with $1 million in 2020. The increased debt issue cost was primarily related to the accelerated amortization of issue costs associated with the fully redeemed unsecured senior notes in the second quarter of 2021.

Income Tax

Income tax recovery for the quarter was $1 million as compared with an income tax expense of $4 million in 2020. During the second quarter of 2021 and 2020, we did not recognize deferred tax assets on certain Canadian and international operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Amount		Availability		Used for		Maturity
Senior credit facility (secured)
US$500 million1 (extendible, revolving term credit facility with US$300 million accordion feature)		US$167 million drawn and US$31 million in outstanding letters of credit		General corporate purposes		June 18, 20251
Real estate credit facilities (secured)
US$10 million		Fully drawn		General corporate purposes		November 19, 2025
$20 million		Fully drawn		General corporate purposes		March 16, 2026
Operating facilities (secured)
$40 million		Undrawn, except $7 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$30 million		Undrawn, except US$3 million in outstanding letters of credit		Letters of credit
Unsecured senior notes (unsecured)
US$348 million – 7.125%		Fully drawn		Debt redemption and repurchases		January 15, 2026
US$400 million – 6.875%		Fully drawn		Debt redemption and repurchases		January 15, 2029

(1) US$53 million expires on November 21, 2023.

At June 30, 2021, we had $1,166 million outstanding under our Senior Credit Facility, Real Estate Credit Facilities and unsecured senior notes as compared with $1,250 million at December 31, 2020.

On June 15, 2021, we issued US$400 million of 6.875% unsecured senior notes due in 2029 in a private offering. These unsecured senior notes were issued at a price equal to 99.253% of the face value.

The net proceeds from the issuance, along with amounts drawn on our Senior Credit Facility, were used to redeem in full US$286 million aggregate principal amount of the 7.750% unsecured senior notes due 2023 and redeem in full US$263 million aggregate principal amount of the 5.250% unsecured senior notes due 2024 for US$557 million, plus accrued and unpaid interest, resulting in a loss on redemption of US$8 million.

The current blended cash interest cost of our debt is approximately 6.2%.

Senior Credit Facility

The Senior Credit Facility requires we comply with certain covenants including a leverage ratio of consolidated senior debt to consolidated Covenant EBITDA (see “NON-GAAP MEASURES”) of less than 2.5:1. For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness.

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

The lenders agreed to extend the Covenant Relief Period to September 30, 2022 and amend the consolidated Covenant EBITDA to consolidated interest coverage ratio for the most recent four consecutive quarters to be greater than or equal to 1.75:1 for the periods ending June 30, 2021 and September 30, 2021, 2.0:1, for the periods ending December 31, 2021 and March 31, 2022, 2.25:1 for the periods ending June 30, 2022 and September 30, 2022 and 2.5:1 for periods ending thereafter.

During the Covenant Relief Period, our distributions in the form of dividends, distributions and share repurchases are restricted to a maximum of US$25 million in each of 2021 and 2022, subject to a pro forma senior net leverage ratio (as defined in the credit agreement) of less than or equal to 1.75:1.

During 2021, the North American and acceptable secured foreign assets must directly account for at least 65% of consolidated Covenant EBITDA calculated quarterly on a rolling twelve-month basis, increasing to 70% thereafter. We also have the option to voluntarily terminate the Covenant Relief Period prior September 30, 2022.

Unsecured Senior Notes

The unsecured senior notes contain a restricted payment covenant that limits our ability to make payments in the nature of dividends, distributions and for share repurchases from shareholders. This restricted payment basket grows from a starting point of October 1, 2017 for the 2026 unsecured senior notes and from July 1, 2021 for the 2029 unsecured senior notes by, among other things, 50% of consolidated cumulative net earnings and decreases by 100% of consolidated cumulative net losses, as defined in the senior note agreements, and payments made to shareholders. The governing net restricted payments basket is currently negative, limiting our ability to declare and make dividend payments until such time as the restricted payments baskets become positive.

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

Covenants

Following is a listing of applicable financial covenants and their calculations for our Senior Credit Facility and Real Estate Credit Facilities:

	Covenant		At June 30, 2021
Senior Credit Facility
Consolidated senior debt to consolidated covenant EBITDA(1)	< 2.50			1.30
Consolidated covenant EBITDA to consolidated interest expense	> 1.75			1.94
Real Estate Credit Facilities
Consolidated covenant EBITDA to consolidated interest expense	> 1.75			1.94

(1) For purposes of calculating the leverage ratio consolidated senior debt only includes secured indebtedness.

At June 30, 2021, we were in compliance with the covenants of our Senior Credit Facility and Real Estate Credit Facilities.

Average shares outstanding

The following table reconciles the weighted average shares outstanding used in computing basic and diluted net loss per share:

	For the three months ended June 30,								For the six months ended June 30,
(Stated in thousands)	2021				2020				2021				2020
Weighted average shares outstanding – basic		13,304				13,712				13,327				13,741
Effect of stock options and other equity compensation plans		–				–				–				–
Weighted average shares outstanding – diluted		13,304				13,712				13,327				13,741

QUARTERLY FINANCIAL SUMMARY

(Stated in thousands of Canadian dollars, except per share amounts)		2020								2021
Quarters ended		September 30				December 31				March 31				June 30
Revenue			164,822				201,688				236,473				201,359
Adjusted EBITDA(1)			47,771				55,263				54,539				28,944
Net loss			(28,476	)			(37,518	)			(36,106	)			(75,912	)
Net loss per basic and diluted share			(2.08	)			(2.74	)			(2.70	)			(5.71	)
Funds provided by operations(1)			27,489				35,282				43,430				12,607
Cash provided by operations			41,950				4,737				15,422				42,219

(Stated in thousands of Canadian dollars, except per share amounts)		2019								2020
Quarters ended		September 30				December 31				March 31				June 30
Revenue			375,552				372,301				379,484				189,759
Adjusted EBITDA(1)			97,895				105,006				101,904				58,465
Net loss			(3,534	)			(1,061	)			(5,277	)			(48,867	)
Net loss per basic and diluted share			(0.23	)			(0.08	)			(0.38	)			(3.56	)
Funds provided by operations(1)			79,930				75,779				81,317				26,639
Cash provided by operations			66,556				74,981				74,953				104,478

(1) See “NON-GAAP MEASURES.”

NON-GAAP MEASURES

In this release we reference non-GAAP (Generally Accepted Accounting Principles) measures. Adjusted EBITDA, Covenant EBITDA, Operating Earnings (Loss), Funds Provided by (Used in) Operations and Working Capital are terms used by us to assess performance as we believe they provide useful supplemental information to investors. 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.

Adjusted EBITDA

We believe that Adjusted EBITDA (earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on assets disposals and depreciation and amortization), as reported in the Interim Consolidated Statement of Net Loss, 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.

Covenant EBITDA

Covenant EBITDA, as defined in our Senior Credit Facility agreement, is used in determining the Corporation’s compliance with its covenants. Covenant EBITDA differs from Adjusted EBITDA by the exclusion of bad debt expense, restructuring costs, certain foreign exchange amounts and the deduction of cash lease payments incurred after December 31, 2018.

Operating Earnings (Loss)

We believe that operating earnings (loss) is a useful measure because it provides an indication of the results of our principal business activities before consideration of how those activities are financed and the impact of foreign exchange and taxation. Operating earnings is calculated as follows:

	For the three months ended June 30,								For the six months ended June 30,
(Stated in thousands of Canadian dollars)	2021				2020				2021				2020
Revenue		201,359				189,759				437,832				569,243
Expenses:
Operating		140,955				106,552				301,576				354,779
General and administrative		31,460				18,449				52,773				37,984
Restructuring		–				6,293				–				16,111
Depreciation and amortization		69,704				81,124				141,717				164,038
Gain on asset disposals		(904	)			(3,470	)			(2,963	)			(7,079	)
Operating earnings (loss)		(39,856	)			(19,189	)			(55,271	)			3,410
Foreign exchange		(296	)			(928	)			(360	)			1,763
Finance charges		27,698				28,083				50,144				55,663
Loss (gain) on repurchase of unsecured notes		9,520				(1,121	)			9,520				(1,971	)
Loss before income taxes		(76,778	)			(45,223	)			(114,575	)			(52,045	)

Funds Provided By (Used In) Operations

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

Working Capital

We define working capital as current assets less current liabilities as reported on the Interim Consolidated Statement of Financial Position.

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 2021;
• our capital expenditure plans for 2021;
• anticipated activity levels in 2021;
• anticipated demand for our drilling rigs;
• the average number of term contracts in place for 2021;
• anticipated cash savings and liquidity;
• customer adoption of Alpha technologies;
• 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:

• the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets;
• the success of our response to the COVID-19 global pandemic;
• 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; 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, directional drilling, well servicing and ancillary oilfield services;
• our customers’ inability to obtain adequate credit or financing to support their drilling and production activity;
• the success of vaccinations for COVID-19 worldwide;
• 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, directional 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 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, 2020, which may be accessed on Precision’s SEDAR profile at www.sedar.com or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this report are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars)		June 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash		$	63,437			$	108,772
Accounts receivable			207,743				207,209
Inventory			24,761				26,282
Total current assets			295,941				342,263
Non-current assets:
Deferred tax assets			1,098				1,098
Right-of-use assets			51,869				55,168
Property, plant and equipment			2,321,160				2,472,683
Intangibles			26,241				27,666
Total non-current assets			2,400,368				2,556,615
Total assets		$	2,696,309			$	2,898,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	166,300			$	150,957
Income taxes payable			885				3,702
Current portion of lease obligations			11,043				11,285
Current portion of long-term debt			2,206				896
Total current liabilities			180,434				166,840
Non-current liabilities:
Share-based compensation			19,605				11,507
Provisions and other			6,787				7,563
Lease obligations			45,953				48,882
Long-term debt			1,145,317				1,236,210
Deferred tax liabilities			16,557				21,236
Total non-current liabilities			1,234,219				1,325,398
Shareholders’ equity:
Shareholders’ capital			2,281,444				2,285,738
Contributed surplus			75,250				72,915
Deficit			(1,201,612	)			(1,089,594	)
Accumulated other comprehensive income			126,574				137,581
Total shareholders’ equity			1,281,656				1,406,640
Total liabilities and shareholders’ equity		$	2,696,309			$	2,898,878

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)

		Three Months Ended June 30,								Six Months Ended June 30,
(Stated in thousands of Canadian dollars, except per share amounts)		2021				2020				2021				2020
Revenue		$	201,359			$	189,759			$	437,832			$	569,243
Expenses:
Operating			140,955				106,552				301,576				354,779
General and administrative			31,460				18,449				52,773				37,984
Restructuring			–				6,293				–				16,111
Earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization			28,944				58,465				83,483				160,369
Depreciation and amortization			69,704				81,124				141,717				164,038
Gain on asset disposals			(904	)			(3,470	)			(2,963	)			(7,079	)
Foreign exchange			(296	)			(928	)			(360	)			1,763
Finance charges			27,698				28,083				50,144				55,663
Loss (gain) on repurchase of unsecured senior notes			9,520				(1,121	)			9,520				(1,971	)
Loss before income taxes			(76,778	)			(45,223	)			(114,575	)			(52,045	)
Income taxes:
Current			788				2,116				1,572				3,175
Deferred			(1,654	)			1,528				(4,129	)			(1,076	)
			(866	)			3,644				(2,557	)			2,099
Net loss		$	(75,912	)		$	(48,867	)		$	(112,018	)		$	(54,144	)
Net loss per share:
Basic		$	(5.71	)		$	(3.56	)		$	(8.41	)		$	(3.94	)
Diluted		$	(5.71	)		$	(3.56	)		$	(8.41	)		$	(3.94	)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

		Three Months Ended June 30,								Six Months Ended June 30,
(Stated in thousands of Canadian dollars)		2021				2020				2021				2020
Net loss		$	(75,912	)		$	(48,867	)		$	(112,018	)		$	(54,144	)
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency			(21,548	)			(71,311	)			(42,546	)			85,697
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt			15,630				53,920				31,539				(64,236	)
Tax expense related to net investment hedge of long-term debt			(285	)			–				–				–
Comprehensive loss		$	(82,115	)		$	(66,258	)		$	(123,025	)		$	(32,683	)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		Three Months Ended June 30,								Six Months Ended June 30,
(Stated in thousands of Canadian dollars)		2021				2020				2021				2020
Cash provided by (used in):
Operations:
Net loss		$	(75,912	)		$	(48,867	)		$	(112,018	)		$	(54,144	)
Adjustments for:
Long-term compensation plans			13,653				6,324				20,801				5,621
Depreciation and amortization			69,704				81,124				141,717				164,038
Gain on asset disposals			(904	)			(3,470	)			(2,963	)			(7,079	)
Foreign exchange			464				(1,718	)			1,022				1,154
Finance charges			27,698				28,083				50,144				55,663
Income taxes			(866	)			3,644				(2,557	)			2,099
Other			(567	)			(823	)			(564	)			(763	)
Loss (gain) on repurchase of unsecured senior notes			9,520				(1,121	)			9,520				(1,971	)
Income taxes paid			(3,905	)			(3,128	)			(4,066	)			(3,948	)
Income taxes recovered			3				–				3				–
Interest paid			(26,412	)			(33,548	)			(45,178	)			(53,043	)
Interest received			131				139				176				329
Funds provided by operations			12,607				26,639				56,037				107,956
Changes in non-cash working capital balances			29,612				77,839				1,604				71,475
			42,219				104,478				57,641				179,431
Investments:
Purchase of property, plant and equipment			(20,255	)			(23,927	)			(28,691	)			(35,412	)
Purchase of intangibles			–				–				–				(57	)
Proceeds on sale of property, plant and equipment			2,590				5,021				5,914				10,711
Changes in non-cash working capital balances			7,515				(1,880	)			2,713				(5,406	)
			(10,150	)			(20,786	)			(20,064	)			(30,164	)
Financing:
Issuance of long-term debt			676,341				5,030				696,341				5,030
Repayments of long-term debt			(712,034	)			(4,911	)			(761,459	)			(45,465	)
Repurchase of share capital			–				(15	)			(4,294	)			(5,259	)
Debt issuance costs			(9,550	)			–				(9,794	)			–
Debt amendment fees			(910	)			(647	)			(910	)			(668	)
Lease payments			(1,709	)			(1,897	)			(3,330	)			(3,625	)
Changes in non-cash working capital balances			1,829				–				1,829				–
			(46,033	)			(2,440	)			(81,617	)			(49,987	)
Effect of exchange rate changes on cash			(430	)			(3,129	)			(1,295	)			1,144
Increase (decrease) in cash			(14,394	)			78,123				(45,335	)			100,424
Cash, beginning of period			77,831				97,002				108,772				74,701
Cash, end of period		$	63,437			$	175,125			$	63,437			$	175,125

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, 2021		$	2,285,738			$	72,915			$	137,581			$	(1,089,594	)		$	1,406,640
Net loss for the period			–				–				–				(112,018	)			(112,018	)
Other comprehensive loss for the period			–				–				(11,007	)			–				(11,007	)
Share repurchases			(4,294	)			–				–				–				(4,294	)
Share-based compensation reclassification			–				(1,958	)			–				–				(1,958	)
Share-based compensation expense			–				4,293				–				–				4,293
Balance at June 30, 2021		$	2,281,444			$	75,250			$	126,574			$	(1,201,612	)		$	1,281,656

(Stated in thousands of Canadian dollars)		Shareholders’ Capital				Contributed Surplus				Accumulated Other Comprehensive Income				Deficit				Total Equity
Balance at January 1, 2020		$	2,296,378			$	66,255			$	134,255			$	(969,456	)		$	1,527,432
Net loss for the period			–				–				–				(54,144	)			(54,144	)
Other comprehensive income for the period			–				–				21,461				–				21,461
Share repurchases			(5,259	)			–				–				–				(5,259	)
Redemption of non-management director DSUs			677				(502	)			–				–				175
Share-based compensation reclassification			–				(1,498	)			–				–				(1,498	)
Share-based compensation expense			–				6,248				–				–				6,248
Balance at June 30, 2020		$	2,291,796			$	70,503			$	155,716			$	(1,023,600	)		$	1,494,415

SECOND QUARTER 2021 EARNINGS 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, July 22, 2021.

The conference call dial in numbers are 1-844-515-9176 or 614-999-9312.

A live webcast of the conference call will be accessible on Precision’s website at www.precisiondrilling.com by selecting “Investor Relations”, then “Webcasts & Presentations.” Shortly after the live webcast, an archived version will be available for approximately 60 days.

An archived version of the webcast will be available for approximately 60 days. An archived recording of the conference call will be available approximately one hour after the completion of the call until July 26, 2021 by dialing 855-859-2056 or 404-537-3406, passcode 4636469.

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. Additionally, Precision offers well service rigs, camps and rental equipment and directional drilling services 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:

Carey Ford, Senior Vice President and Chief Financial Officer
713.435.6100

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