Precision Drilling Corporation
NYSE : PDS
TSX : PD

Precision Drilling Corporation

October 21, 2010 07:01 ET

Precision Drilling Corporation Reports 2010 Third Quarter Financial Results

CALGARY, ALBERTA--(Marketwire - Oct. 21, 2010) - Precision Drilling Corporation

(Canadian dollars except as indicated)

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.

Precision Drilling Corporation ("Precision" or the "Corporation") reported net earnings of $61 million or $0.21 per diluted share for the three months ended September 30, 2010 compared to net earnings of $72 million or $0.25 per diluted share for the third quarter of 2009. The results for the third quarter of 2010 include a foreign exchange gain of $18 million while the third quarter of 2009 included a foreign exchange gain of $63 million.

Revenue for the third quarter of 2010 totaled $359 million compared to $253 million for the same period of 2009. The increase in drilling activity both in Canada and in the United States in the third quarter of 2010 over the same period of 2009 led to the 42% increase in revenue. Earnings before interest, taxes, depreciation and amortization and foreign exchange ("EBITDA") were $113 million for the third quarter of 2010 compared to EBITDA of $86 million for the third quarter of 2009. EBITDA is not a recognized financial measure under Generally Accepted Accounting Principles ("GAAP") see "Non-GAAP Measures" in this report. The increase in EBITDA between the two years is due to the increase in drilling activity.

Revenue for the second quarter of 2010 was $262 million and EBITDA totaled $59 million. Third quarter 2010 revenue and EBITDA were higher than the second quarter of 2010 due to the seasonality of oilfield service activity in Canada known as "spring break-up" that takes place during the second quarter. This is a time in Canada in which drilling rigs cannot change locations due to road conditions and normally occurs in March to June of each year.

For the nine months ended September 30, 2010, Precision reported net earnings of $57 million or $0.20 per diluted share compared to net earnings of $187 million or $0.75 per diluted share for the same period of 2009. Revenue for the nine months ended September 30, 2010 was $994 million compared to $911 million for the corresponding period of 2009. EBITDA totaled $290 million for the nine months ended September 30, 2010 compared to $314 million for the same period of 2009. Higher activity levels in 2010 were offset by lower average drilling revenue per day in the Corporation's operating areas. Results for the nine months ended September 30, 2010 include a foreign exchange gain of $12 million as compared to a foreign exchange gain of $105 million for the same period of 2009.

Kevin Neveu, Precision's President and Chief Executive Officer, stated: "The strong customer demand for high performance rigs targeting oil has led the rig count higher and continues to provide an encouraging outlook for Precision. Approximately 60% of Precision's rigs working today are drilling for oil or natural gas liquids targets and approximately 80% are drilling complex horizontal or directional wells."

"The third quarter of 2010 was the second consecutive quarter which Precision realized improved average revenue per day over the previous quarter in the United States. This confirms our previously stated view that the second quarter of 2010 represented the bottom of Precision's average dayrate for this cycle. In addition, third quarter EBITDA increased by 31% from prior year levels. These improvements are being driven by high customer demand for Precision's Tier 1 and 2 rigs in both the United States and Canada and from the re-establishment of oil drilling demand."

"In the United States, oil related activity has continued to strengthen. Precision's average active rig count in the United States for the third quarter of 2010 was up 5% over the second quarter of the year and 76% over the same period in 2009. Precision's active rig count in the United States is currently 99 and we expect it to stay at this level or increase modestly over the coming months. If low natural gas prices persist, there is the potential for further regional pullback in gas related activity; however, we would expect most of these rigs to be absorbed by oil and natural gas liquids rich drilling activity. As demand for Tier 1-Super Series and Tier 2 rigs remains strong, dayrates in the United States markets are continuing to modestly improve from previous quarters."

"Higher than normal rainfall through much of the Western Canada Sedimentary Basin during the third quarter hampered drilling activity. Over the past few weeks, Precision has reactivated approximately 30 rigs sidelined due to poor weather conditions. Precision's current active rig count in Canada is at 119 and, despite the wet weather, the average rig count of 82 for the third quarter of 2010 was 62% higher than the comparable quarter of 2009. Most of this increase is driven by unconventional horizontal drilling and completion techniques being applied to conventional oil reservoirs in Western Canada and we believe that the remainder of 2010 activity levels will exceed those achieved in 2009. While in early discussions with customers, the Canadian 2011 winter drilling season is expected to be at least as busy as winter 2010. We would expect there to be higher market dayrates because of this level of anticipated customer demand."

"Precision has seized market opportunities during 2010 which includes the contracting and construction of nine new rigs that were announced last quarter. Five of these new-rig builds are Super Singles of which two have been delivered on time and on budget in Canada. Of the remaining three Super Single rigs, two are expected to be deployed in the United States and one in Canada. The other four new-rig builds are Super Triple rigs with all four expected to work in the United States. All nine rigs have been contracted with an average contract term of approximately three years."

"Looking forward to 2011, Precision is going to continue its high-value focused organic growth program as we believe there will be ample opportunities for new-build Super Series rigs which will continue to provide the High Performance High Value service that meets and exceeds customer requirements. Precision's balance sheet is solid and provides the financial flexibility to capitalize on potential opportunities as Precision looks toward expanding its drilling, directional drilling and international presence during 2011", concluded Mr. Neveu.



SELECT FINANCIAL AND OPERATING INFORMATION

(stated in
thousands of
Canadian
dollars, Three months ended Nine months ended
except per September 30, September 30,
share/ unit 2010 2009 % 2010 2009 %
amounts) Change Change
----------------------------------------------------------------------------
Revenue $ 359,152 $ 253,337 41.8 $ 994,116 $ 911,379 9.1
EBITDA(1) 112,597 85,739 31.3 289,994 314,386 (7.8)
Net earnings 61,078 71,696 (14.8) 56,548 186,588 (69.7)
Cash
provided by
operations 67,575 19,948 238.8 230,203 434,098 (47.0)
Capital
spending:
Upgrade
capital
expenditures 29,323 4,020 629.4 50,714 21,820 132.4
Expansion capital
expenditures 6,463 10,178 (36.5) 14,239 157,623 (91.0)
Proceeds on sale (2,072) (2,428) (14.7) (9,371) (10,257) (8.6)
-----------------------------------------------------------
Net capital
spending 33,714 11,770 186.4 55,582 169,186 (67.1)


Distributions
declared - - - - 6,408 (100.0)
Net earnings -
per
share/unit:
Basic 0.22 0.26 (15.4) 0.21 0.77 (72.7)
Diluted 0.21 0.25 (16.0) 0.20 0.75 (73.3)
Distributions
declared per
share/unit $ - $ - $ - $ 0.04 (100.0)

Contract drilling
rig fleet 353 390 (9.5) 353 390 (9.5)
Drilling rig
utilization days:
Canada 7,557 4,653 62.4 21,446 14,634 46.5
United States 8,512 4,835 76.0 23,535 16,773 40.3
International 145 176 (17.6) 480 538 (10.8)
Service rig
fleet 200 229 (12.7) 200 229 (12.7)
Service rig
operating hours 70,265 49,581 41.7 195,277 147,253 32.6
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".


FINANCIAL POSITION AND RATIOS

(Stated in thousands of
Canadian dollars, except September 30, December 31, September 30,
ratios) 2010 2009 2009
----------------------------------------------------------------------------
Working capital $ 392,057 $ 320,860 $ 279,201
Working capital ratio 3.4 3.5 2.5
Long-term debt(1) $ 679,291 $ 748,725 $ 795,560
Total long-term financial
liabilities $ 704,802 $ 775,418 $ 822,554
Total assets $ 4,188,496 $ 4,191,713 $ 4,360,861
Long-term debt to long-term
debt plus equity ratio(1) 0.21 0.22 0.23
----------------------------------------------------------------------------
(1) Excludes current portion of long-term debt and is net of unamortized
debt issue costs.


Revenue in the third quarter of 2010 was 42% higher than the prior year period. The increase was due to a year-over-year increase in utilization days both in Canada and the United States. The mix of drilling rigs working under term contracts and well-to-well contracts moved average pricing slightly higher in the United States during the quarter over the previous quarter. Revenue in Precision's Contract Drilling Services segment increased by 41% while revenue increased 43% in the Canadian based Completion and Production Services segment in the third quarter of 2010 compared to the prior year quarter.

EBITDA margin was 31% for the third quarter of 2010 compared to 34% for the same period in 2009. The three percentage point decline in EBITDA margin was primarily attributable to fewer idle but contracted rig days in the third quarter of 2010 versus the prior year period and a lower term contract mix. Precision's term contract position with customers, a highly variable operating cost structure and economies achieved through vertical integration of the supply chain continue to support EBITDA margins.

In the Contract Drilling Services segment, Precision currently owns 353 contract drilling rigs, including 202 in Canada, 148 in the United States and three rigs in international locations and 84 drilling rig camps. Precision's Completion and Production Services segment includes 200 service rigs, 20 snubbing units, 79 water treatment units and a broad mix of rental equipment.

During the quarter an average of 82 drilling rigs worked in Canada and 94 in the United States and Mexico totaling an average of 176 rigs working. This compares with an average of 130 rigs working in the second quarter of 2010 and 106 rigs in the third quarter a year ago.

Precision's priorities for 2010 are threefold. The first is to continue to deliver the High Performance High Value level of services that customers require to drill the technically challenging wells of today's unconventional resource play exploitation. Second, Precision continues to improve its balance sheet, which provides financial flexibility and liquidity to be able to seize market opportunities, our third priority. To that end, during 2010 Precision has repaid its debt by $104 million and reduced the overall effective interest rate on its debt to approximately 7%. Additionally, Precision's 2010 new rig build program currently stands at nine rigs. From the previously announced capital expenditure plan of $189 million, Precision is planning an additional $29 million for 2010 for North American and international rig and asset upgrades to meet customers' needs. Total capital spending for 2010 is now estimated at $218 million with an additional $82 million to be spent in 2011 for the new-rig builds.

Drilling in Canada for 2010 to date is outpacing the drilling activity of 2009 because of oil related drilling activity. In the United States, the industry and Precision have experienced improving utilization as customer spending has increased due principally to higher oil prices.

Oil and natural gas prices during the third quarter of 2010 were higher than a year ago. For the third quarter of 2010 AECO natural gas spot prices averaged $4.21 per MMBtu, 44% higher than the third quarter 2009 average of $2.93 per MMBtu. In the United States, Henry Hub natural gas spot prices averaged US$4.28 per MMBtu in the third quarter of 2010, an increase of 36% over the third quarter 2009 average of US$3.15 per MMBtu. West Texas Intermediate crude oil averaged US$75.97 per barrel during the quarter, 11% higher when compared to US$68.18 per barrel in the same period in 2009.

Summary for the three months ended September 30, 2010:

- Precision continues to have a strong balance sheet. As at September 30, 2010, Precision had a debt to capitalization ratio of 0.21, a cash balance of $209 million and, in combination with $436 million availability under its revolving credit facility and demand operating lines, continued to carry ample liquidity.

- Operating earnings were $65 million and 18% of revenue, compared to $55 million and 22% of revenue in 2009. Operating earnings were positively impacted by the increase in activity in most of Precision's service offerings over the same period in 2009.

- Financial charges were $22 million, a decrease of $8 million due to the reduction in long-term debt over the prior year period.

- The majority of Precision's credit facilities are denominated in U.S. dollars. During the quarter, the Canadian dollar strengthened in relation to the U.S. dollar giving rise to unrealized translation gains which accounted for most of the $18 million foreign exchange gain recognized in the quarter compared to a $67 million gain in 2009.

- Capital expenditures for the purchase of property, plant and equipment were $36 million in the third quarter, an increase of $22 million over the same period in 2009. Capital spending for the third quarter of 2010 included $7 million on expansionary capital initiatives and $29 million on the maintenance and upgrade of existing assets.

- Average revenue per utilization day for contract drilling rigs decreased in the third quarter of 2010 to US$18,914 from the prior year third quarter of US$22,497 in the United States and decreased in Canada from $18,195 in the third quarter of 2009 to $15,686 for the third quarter of 2010. The decrease in revenue rates for the third quarter in the United States reflects the greater proportion of rigs working under well-to-well contracts compared to the prior year and idle but contracted revenue in 2009. In the United States, for the third quarter of 2010 57% of Precision's working rigs were working under contract compared to 82% in the 2009 comparative period. These figures also include US$1 million in revenue generated from idle but contracted rigs associated with term customer contracts, a reduction of US$8 million compared to the prior year third quarter. Turnkey revenue for the third quarter of 2010 was US$15 million generated from 183 utilization days compared with US$6 million from 117 days in 2009. In Canada, contract drilling rates are down from the prior year comparative period due to a higher proportion of rig activity being derived from the competitive spot market and the receipt of idle but contracted revenue in 2009 of $9 million compared to $2 million in the current year. Within Precision's Completion and Production Services segment, average hourly rates for service rigs were $595 in the third quarter of 2010 compared to $614 in the third quarter of 2009.

- Average operating costs per day for drilling rigs decreased in the third quarter of 2010 to US$12,391 from the prior year third quarter of US$12,692 in the United States and from $8,802 to $8,303 in Canada. The cost decrease in Canada was primarily due to rig mix with a higher percentage of spot market work for the double and single rigs which are lower cost rigs. In the United States, the decrease was due to lower labour costs and lower ad valorem taxes partially offset by higher repairs and maintenance as drilling rigs are put back into service. Within Precision's Completion and Production Services segment, average hourly operating costs for service rigs were $434 in the third quarter of 2010 as compared to $438 in the third quarter of 2009.

Summary for the nine months ended September 30, 2010:

- Revenue was $994 million, an increase of $83 million or 9% from the prior year due to higher activity in both of Precision's business segments.

- Operating earnings were $158 million, a decrease of $54 million or 26% from 2009. Operating earnings were 16% of revenue, compared to 23% in 2009.

- Capital expenditures for the purchase of property, plant and equipment were $65 million in 2010, a decrease of $114 million over the same period in 2009, and included $14 million on expansionary capital initiatives and $51 million on the maintenance and upgrade of existing assets. During the first nine months of 2009, 16 newly-built Super Series drilling rigs were added to the fleet under long-term customer contracts, seven in Canada and nine in the United States.

- Financial charges were $103 million, a decrease of $10 million from the prior year, as reduced interest charges were offset by increased amortization of deferred financing costs from the repayment of debt. Total debt has been reduced by $104 million year to date in 2010.

- During the first nine months of the year Precision recorded a foreign exchange gain of $12 million compared to a $105 million gain in 2009. A significant component of these results relates to the translation of Precision's U.S. dollar denominated credit facilities.

- General and administrative costs were $73 million which was in-line with the prior year.

OUTLOOK

Precision has a strong portfolio of long-term customer contracts that provides a base level of activity and revenue for the Corporation. Precision expects to have an average of approximately 96 rigs committed under term contracts in North America in the fourth quarter of 2010 and an average of 82 rigs contracted for the first quarter of 2011. In Canada, term contracted rigs generate from 200 to 250 utilization days per rig year due to the seasonal nature of well access whereas in the United States they generate about 350 utilization days per rig year in most regions.

For all of 2010, Precision expects to have an average of approximately 88 rigs under term contract, of which 49 are rigs contracted in the United States, 37 in Canada and two in Mexico. For 2011, based on the current position, Precision expects to have an average of 32 rigs in Canada under term contract, 31 in the United States and two in Mexico, for an average of 65 for the full year. Since July 22, 2010, Precision added five term contracts for new build Super Series rigs expected to go to work in 2010 and 2011.

Capital expenditures are expected to be approximately $218 million for 2010, with approximately $144 million for upgrade and maintenance capital to existing equipment fleets and $74 million for expansion capital. Capital expenditures for North American and international rig tier improvements are included in upgrade capital. The expansion capital program includes nine new build Super Series rigs and additional rental and water treatment equipment.

The first nine months of 2010 experienced substantially higher drilling activity in Canada than the prior year and United States drilling activity continues to make improvements. The demand for energy is rising as the global economies are starting to improve and move out of the bottom of the recession. There is also increased liquidity in the capital markets as well as higher oil commodity prices which is providing some of Precision's customers' liquidity to increase drilling programs. The drilling sector in both Canada and the United States is experiencing a period of year-over-year improvements in utilization. According to industry sources, as at October 15, 2010, the United States active land drilling rig count was up about 64% from the same period in the prior year while the Canadian drilling rig count had increased about 69%. Even with the year-over-year improvements in rig utilization, there has been virtually no change in spot market dayrates charged to customers in Canada, and only modest improvements in dayrates in the United States. Future improvements in dayrates are expected in Canada as we move into 2011 and United States rates are expected to continue to modestly improve.

Due to the increased demand for drilling rigs, Precision is experiencing increased demand for rig personnel. On October 1, 2010 a wage increase to Canadian rig based personnel went into effect. Precision is also seeing this increase in demand for rig personnel in the United States and a near-term wage increase in the United States is a possibility. Precision expects to recoup the majority of these wage increases, if implemented, through higher dayrates to our customers.

Natural gas production in the United States has remained strong despite reduced drilling activity over the last two years. United States natural gas storage levels are currently near the upper range of the five-year average but slightly below storage levels of a year ago. This also strongly influences Canadian activity since Canada exports a significant portion of its natural gas production to the United States. The increase in oil and natural gas liquids drilling in areas like the Cardium, Bakken and Eagle Ford have been strong and the United States oil rig count as at October 15, 2010 is 125% higher than it was a year ago. Precision has more equipment working in oil related plays than at any time in the last 20 years; however, approximately 40% of Precision's current active rig count are drilling for natural gas targets.

With high storage levels, consistent production and the view that North America has an oversupply of natural gas, gas prices have remained at relatively low levels. To date, there has been little change in customers' natural gas drilling plans. If low natural gas prices continue, Precision and the North American drilling industry could see a further reduction in demand for natural gas drilling. With the current demand for oil and liquids rich natural gas drilling, Precision believes further reductions in gas directed drilling would continue to be offset by increases in oil and natural gas liquids rich drilling.

Despite near term challenges, the future of the global oil and gas industry remains promising. For Precision, 2010 represents an opportunity to demonstrate our value to customers through delivery of High Performance High Value services that deliver low customer well costs and strong margins to Precision.

Beginning January 1, 2011, Precision will be reporting its financial statements under International Financial Reporting Standards ("IFRS") and future financial statements will be required to be prepared in compliance with IFRS as if Precision had always followed these standards. Certain first time adoption elections may be made which will impact the opening balance sheet amounts and those key first-time elections are discussed later in this report under the section "Transition to International Financial Reporting Standards (IFRS)."

SEGMENTED FINANCIAL RESULTS

Precision's operations are reported in two segments. The Contract Drilling Services segment includes the drilling rig, camp and catering, oilfield supply, and manufacturing divisions. The Completion and Production Services segment includes the service rig, snubbing, rental, and wastewater treatment divisions.




(stated in Three months ended Nine months ended
thousands of September 30, September 30,
Canadian 2010 2009 % 2010 2009 %
dollars) Change Change
----------------------------------------------------------------------------
Revenue:
Contract
Drilling
Services $ 305,813 $ 216,391 41.3 $ 845,515 $ 791,496 6.8
Completion
and
Production
Services 55,209 38,738 42.5 156,239 127,303 22.7
Inter-segment
eliminations (1,870) (1,792) 4.4 (7,638) (7,420) 2.9
----------------------------------------------------------------------------
$ 359,152 $ 253,337 41.8 $ 994,116 $ 911,379 9.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------

EBITDA(1)
Contract
Drilling
Services $ 105,806 $ 86,094 22.9 $ 279,565 $ 308,543 (9.4)
Completion
and
Production
Services 15,584 8,250 88.9 36,901 29,816 23.8
Corporate and
other (8,793) (8,605) 2.2 (26,472) (23,973) 10.4
----------------------------------------------------------------------------
$ 112,597 $ 85,739 31.3 $ 289,994 $ 314,386 (7.8)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".


SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

(stated in
thousands of
Canadian Three months ended Nine months ended
dollars, September 30, September 30,
except where 2010 2009 % 2010 2009 %
noted) Change Change
----------------------------------------------------------------------------
Revenue $ 305,813 $ 216,391 41.3 $ 845,515 $ 791,496 6.8
Expenses:
Operating 186,883 117,200 59.5 525,716 439,513 19.6
General and
administrative 13,124 13,097 0.2 40,234 43,440 (7.4)
----------------------------------------------------------------------------
EBITDA (1) 105,806 86,094 22.9 279,565 308,543 (9.4)
Depreciation 40,509 25,610 58.2 112,562 87,007 29.4
----------------------------------------------------------------------------
Operating
earnings(1) $ 65,297 $ 60,484 8.0 $ 167,003 $ 221,536 (24.6)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating
earnings as a
percentage
of revenue 21.4% 28.0% 19.8% 28.0%
----------------------------------------------------------------------------
Drilling rig
revenue per
utilization
day in
Canada(2) $ 15,686 $ 18,195 (13.8) $ 15,681 $ 18,384 (14.7)
----------------------------------------------------------------------------
Drilling rig
revenue per
utilization
day in the
United
States(2) US$ 18,914 US$ 22,497 (15.9) US$ 18,792 US$ 24,344 (22.8)
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".
(2) Includes revenue from idle but contracted rig days and lump sum payouts.


Three months ended September 30,
Canadian onshore drilling
statistics:(1) 2010 2009
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs
(end of period) 202 805 226 865
Drilling rig operating
days (spud to release) 6,816 29,575 4,232 16,406
Drilling rig operating
day utilization 37% 40% 20% 21%
Number of wells drilled 820 3,178 584 2,004
Average days per well 8.3 9.3 7.2 8.2
Number of metres drilled
(000s) 1,288 5,422 891 3,046
Average metres per well 1,571 1,706 1,525 1,520
Average metres per day 189 183 210 186
----------------------------------------------------------------------------

Nine months ended September 30,
Canadian onshore drilling
statistics:(1) 2010 2009
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Number of drilling rigs
(end of period) 202 805 226 865
Drilling rig operating
days (spud to release) 19,315 82,941 13,103 53,017
Drilling rig operating
day utilization 35% 38% 21% 22%
Number of wells drilled 2,077 7,902 1,666 5,909
Average days per well 9.3 10.5 7.9 9.0
Number of metres drilled
(000s) 3,457 13,757 2,487 8,482
Average metres per well 1,665 1,741 1,493 1,435
Average metres per day 179 166 190 160
----------------------------------------------------------------------------
(1) Canadian operations only.
(2) Canadian Association of Oilwell Drilling Contractors ("CAODC") and
Precision - excludes non-CAODC rigs and non-reporting CAODC members.


United States onshore
drilling statistics:(1) 2010 2009
----------------------------------------------------------------------------
Precision Industry(2) Precision Industry(2)
----------------------------------------------------------------------------
Average number of active
land rigs for quarters
ended:
March 31 78 1,297 82 1,287
June 30 88 1,464 50 885
September 30 93 1,603 53 936
----------------------------------------------------------------------------
Year to date average 86 1,463 61 1,036
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) United States lower 48 operations only.
(2) Baker Hughes rig counts.


Contract Drilling Services segment revenue for the third quarter of 2010 increased by 41% to $306 million and EBITDA increased by 23% to $106 million compared to the same period in 2009. The increase in revenue and EBITDA was due to the higher drilling rig activity in both Canada and the United States.

Activity in North America was impacted by increased customer demand due to the improvement in global oil prices; this was offset by wet weather conditions in western Canada restricting drilling rig mobility. Drilling rig revenue per utilization day in Canada was down 14% over the prior year as a result of increased activity in the competitive spot market. During the quarter, 32% of Precision's utilization days in Canada were generated from rigs under term contract compared with 42% in 2009 while in the United States 57% of utilization days were generated from rigs under term contract compared with 82% in 2009. The majority of the additional activity was associated with oil related plays. As at the end of the quarter in the United States, there were 59 drilling rigs working under term contracts and 36 in Canada.

Drilling rig utilization days (spud to rig release plus move days) in Canada during the third quarter of 2010 were 7,557, an increase of 62% compared to 4,653 in 2009. Drilling rig activity for Precision in the United States was 76% higher than the same quarter of 2009 due to the recovery of drilling rig activity which began in the third quarter of 2009. Precision had two rigs working in Mexico during both periods. Precision's camp and catering division benefited from the start up of a 500 man base camp in Canada that is expected to be contracted through the end of 2010.

Contract Drilling Services operating costs were 61% of revenue for the quarter compared to 54% for the prior year quarter. The increase was primarily associated with the lower rig rates received in the spot market. On a per day basis, operating costs for the drilling rig division in Canada were 6% lower than the prior year quarter due to the differences in rig mix as 2010 had a higher proportion of days from single and double rigs which typically require less ancillary equipment. Operating costs for the quarter in the United States on a per day basis were down from the comparable period in 2009 due to lower labour costs and lower ad valorem taxes partially offset by higher repairs and maintenance, as drilling rigs are put back into service.

Quarterly depreciation in the Contract Drilling Services segment increased 58% from the prior year due to the increase in activity in both Canada and the United States. Both the United States and Canadian contract drilling operations use the unit of production method of calculating depreciation.



SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

(stated in
thousands of Three months ended Nine months ended
Canadian September 30, September 30,
dollars, except 2010 2009 % 2010 2009 %
where noted) Change Change
----------------------------------------------------------------------------
Revenue $ 55,209 $ 38,738 42.5 $ 156,239 $ 127,303 22.7
Expenses:
Operating 37,452 27,790 34.8 112,928 90,318 25.0
General and
administrative 2,173 2,698 (19.5) 6,410 7,169 (10.6)
----------------------------------------------------------------------------
EBITDA(1) 15,584 8,250 88.9 36,901 29,816 23.8
Depreciation 5,611 3,714 51.1 16,164 12,405 30.3
----------------------------------------------------------------------------
Operating
earnings(1) $ 9,973 $ 4,536 119.9 $ 20,737 $ 17,411 19.1

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings
as a percentage
of revenue 18.1% 11.7% 13.3% 13.7%
----------------------------------------------------------------------------

Well servicing
statistics:
Number of service
rigs (end of
period) 200 229 (12.7) 200 229 (12.7)
Service rig
operating hours 70,265 49,581 41.7 195,277 147,253 32.6
Service rig
operating hour
utilization 38% 24% 31% 24%
Service rig
revenue per
operating
hour $ 595 $ 614 (3.1) $ 608 $ 664 (8.4)
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".


Completion and Production Services segment revenue for the third quarter increased by 43% from 2009 to $55 million and EBITDA increased by 89% to $16 million. The increase in revenue was attributed to an increase in operating hours and the increase in EBITDA was the result of higher activity along with a decrease in variable costs.

Service rig activity increased 42% from the prior year period, with the service rig fleet generating 70,265 operating hours in the third quarter of 2010 compared with 49,581 hours in the prior year quarter for utilization of 38% and 24%, respectively. The increase was a result of higher service rig demand for completions of new wells along with production maintenance of existing wells, both with an emphasis on oil wells. New well completions accounted for 26% of service rig operating hours in the third quarter compared to 23% in the same quarter in 2009.

Average service revenue decreased $19 per operating hour to $595 from the prior year period due to the impact of wage reductions implemented in late 2009 that were passed along to customers.

Operating costs as a percentage of revenue decreased to 68% in the third quarter of 2010 from 72% in the same period of 2009 as lower variable operating expenses and fixed costs spread over a higher activity base were offset by lower revenue rates in the service rig division. Operating costs per service rig operating hour have decreased over the comparable period in 2009 due primarily to lower wages, partially offset by higher repair and maintenance costs to prepare for increased activity.

Depreciation in the Completion and Production Services segment in the third quarter of 2010 was 51% higher than the prior year due to higher equipment utilization.

SEGMENT REVIEW OF CORPORATE AND OTHER

Corporate and other expenses for the third quarter of 2010 was in-line with the prior year comparative period at $9 million.

OTHER ITEMS

Net financial charges were $22 million for the third quarter of 2010 which was down from $8 million when compared to the prior year quarter. The decrease was attributable to the significant reduction in long-term debt achieved by Precision.

The Corporation had a foreign exchange gain of $18 million during the third quarter of 2010 due to the strengthening of the Canadian dollar versus the United States dollar, as the majority of the Corporation's credit facilities are denominated in United States dollars.

Precision's effective tax rate on earnings before income taxes for the first nine months of 2010 was 15% compared to 9% for the same period in 2009. The higher effective tax rate for 2010 is primarily the result of withholding, capital and state taxes incurred in a period of lower pretax earnings and foreign exchange gains offset by income taxed at lower rates.

LIQUIDITY AND CAPITAL RESOURCES

In June 2010, Precision converted to a corporation pursuant to a Plan of Arrangement under the Business Corporations Act of Alberta. Precision obtained approval for the conversion from its unitholders in conjunction with its 2010 Annual and Special Meeting of Unitholders held on May 11, 2010. An information circular and proxy statement was mailed to unitholders in connection with the meeting.

The oilfield services business is inherently cyclical in nature. Precision employs a disciplined approach to minimize costs through operational management practices and a variable cost structure, and to maximize revenues through term contract positions with a focus of maintaining a strong balance sheet. This operational discipline provides Precision with the financial flexibility to capitalize on strategic acquisitions and internal growth opportunities at all points in the business cycle.

Operating within a highly variable cost structure, Precision's maintenance capital expenditures are tightly governed by and highly responsive to activity levels with additional cost savings leverage provided through Precision's internal manufacturing and supply divisions. Expansion capital for new rig build programs require 2 - 5 year term contracts in order to mitigate capital recovery risk. To capitalize on market opportunities Precision increased its anticipated capital expenditures by $29 million to a total of $218 million for 2010.

In managing foreign exchange risk, Precision endeavours to align the currency of the majority of its debt obligations and capital expenditures with the currency of the supporting operating cash flows. Interest rate risk is partially managed through hedging activities and by reducing debt.

During the third quarter of 2010 Precision used $98 million in operating cash inflow to fund a $30 million increase in non-cash working capital, $31 million in net capital spending and $13 million in long-term debt reduction. Liquidity remains sufficient as Precision had a cash balance of $209 million and the US$410 million revolver in its senior secured credit facility ("Secured Facility") remains undrawn except for US$25 million in outstanding letters of credit as at September 30, 2010. In addition to the Secured Facility, Precision has available $40.4 million in operating facilities (net of letters of credit of $0.7 million) which is used for working capital management. During the current quarter, working capital increased by $49 million over the second quarter of 2010 to $392 million.

As at September 30, 2010, the Corporation was in compliance with the covenants under the Secured Facility. Precision expects to remain in compliance with financial covenants under its Secured Facility and have complete access to credit lines during 2010. The Secured Facility contains customary covenants including three financial covenants: a leverage ratio; interest coverage ratio; and fixed charge coverage ratio.

The current blended cash interest cost of Precision's debt is approximately 7.0%. Precision has repaid $104 million in debt during 2010 and may consider further voluntary long-term debt reduction or refinancing as industry fundamentals stabilize and operating cash flow forecasts become clearer. As at September 30, 2010, approximately $598 million was outstanding under the Secured Facility and $175 million was outstanding under the unsecured facility.

On June 30, 2010, the Corporation amended the terms of the Secured Facility to lower the LIBOR floor for the Term Loan B facility to 1.75% from 3.25% and lower the LIBOR interest rate margin on existing loans under the Term Loan B facility to 5.0% from an average interest rate margin of 6.45%. The Secured Facility was also amended to provide for the payment in certain circumstances by the Corporation to lenders under the Term Loan B facility of a fee equal to 1.0% of the aggregate principal amount of loans subsequently prepaid or re-priced under the Term Loan B facility on or prior to September 30, 2011. In connection with the amendments to the Secured Facility, non-consenting holders of US$74 million in loans under the Term Loan B facility were repaid by the Corporation with cash on hand.

During the second quarter of 2010, Precision amended the terms of the Secured Facility to increase the size of the revolving credit facility to US$410 million from US$260 million. In addition, a subsidiary of Precision arranged a new secured operating facility in the amount of US$15 million with a U.S. bank. Advances under this facility are at the bank's prime lending rate.

During the first quarter of 2010, Precision amended certain covenants and terms contained in the Secured Facility. These amendments included an increase in the leverage ratio test from 3.00:1 to 3.50:1 through December 31, 2011, a decrease in the interest coverage ratio test from 3.00:1 to 2.75:1 through December 31, 2011 and the removal of the restrictions on expansion related capital expenditures (limitations on total capital expenditures remained unchanged).



QUARTERLY FINANCIAL SUMMARY

(stated in thousands of Canadian dollars, except per share/unit amounts)

2009 2010
----------------------------------------------------------------------------
Quarters ended December 31 March 31 June 30 September 30
----------------------------------------------------------------------------
Revenue $ 286,067 $ 373,136 $ 261,828 $ 359,152
EBITDA(1) 92,615 118,403 58,994 112,597
Net earnings (loss): (24,885) 62,017 (66,547) 61,078
Per basic share/unit (0.09) 0.23 (0.24) 0.22
Per diluted share/unit (0.09) 0.22 (0.24) 0.21
Cash provided by operations 70,631 20,624 142,004 67,575
Distributions - declared $ - $ - $ - $ -
----------------------------------------------------------------------------

2008 2009
----------------------------------------------------------------------------
Quarters ended December 31 March 31 June 30 September 30
----------------------------------------------------------------------------
Revenue $ 335,049 $ 448,445 $ 209,597 $ 253,337
EBITDA(1) 134,795 169,387 59,260 85,739
Net earnings: 92,376 57,417 57,475 71,696
Per basic share/unit 0.67 0.30 0.23 0.26
Per diluted share/unit 0.66 0.28 0.22 0.25
Cash provided by operations 82,904 201,596 212,554 19,948
Distributions - declared $ 77,551 $ 6,408 $ - $ -
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "NON-GAAP MEASURES".


NON-GAAP MEASURES

Precision uses certain measures that are not recognized under Canadian generally accepted accounting principles to assess performance and believes these non-GAAP measures provide useful supplemental information to investors. Following are the non-GAAP measures Precision uses in assessing performance.

EBITDA

Management believes that in addition to net earnings, EBITDA, as derived from information reported in the Consolidated Statements of Earnings and Retained Earnings, is a useful supplemental measure as it provides an indication of the results generated by Precision's principal business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested or how depreciation and amortization charges affect results.

The following table provides a reconciliation of net earnings under GAAP, as disclosed in the Consolidated Statement of Earnings and Retained Earnings, to EBITDA.



Three months ended Nine months ended
(stated in thousands of September 30, September 30,
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
EBITDA $ 112,597 $ 85,739 $ 289,994 $ 314,386
Add (deduct):
Depreciation and amortization (47,300) (30,378) (132,288) (102,549)
Foreign exchange 18,003 63,486 11,670 105,055
Finance charges (21,848) (29,396) (102,819) (112,947)
Income taxes (374) (17,755) (10,009) (17,357)
----------------------------------------------------------------------------
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Operating Earnings

Management believes that in addition to net earnings, operating earnings as reported in the Consolidated Statements of Earnings and Retained Earnings is a useful supplemental measure as it provides an indication of the results generated by Precision's principal business activities prior to consideration of how those activities are financed, the impact of foreign exchange or how the results are taxed.

The following table provides a reconciliation of net earnings under GAAP, as disclosed in the Consolidated Statement of Earnings and Retained Earnings, to operating earnings.



Three months ended Nine months ended
(stated in thousands of September 30, September 30,
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Operating earnings $ 65,297 $ 55,361 $ 157,706 $ 211,837
Add (deduct):
Foreign exchange 18,003 63,486 11,670 105,055
Finance charges (21,848) (29,396) (102,819) (112,947)
Income taxes (374) (17,755) (10,009) (17,357)
----------------------------------------------------------------------------
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------


TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Precision is required to report its financial results in accordance with IFRS from January 1, 2011, the changeover date set by the Canadian Accounting Standards Board (AcSB). IFRS compliant comparative financial information for one year will be required on the effective date.

Precision's IFRS project is on schedule and progressing well. Precision's IFRS project team and management continue to liaise with the external auditors and key stakeholders in the company to enable timely and smooth transition to IFRS in 2011.

With respect to the key areas identified in previous reports, the following is a summary of additional progress:

IFRS 1 - First Time Adoption

IFRS 1 - First Time Adoption of IFRS - provides one-time accounting choices in the form of mandatory and optional exemptions.

Precision has identified the preferred IFRS 1 elections and calculated the potential impact of the elections on its financial statements.

Precision intends to restate its December 2008 acquisition of Grey Wolf under the principles outlined in IFRS 3 - Business Combinations. This is expected to reduce goodwill on Precision's balance sheet by the amount of goodwill recorded on acquisition of US$456 million with an equivalent reduction in shareholder's capital. The difference arises in the accounting for the purchase consideration under IFRS versus Canadian GAAP. Under Canadian GAAP purchase consideration is valued based on Precision's share price on the date at which the acquisition was announced and under IFRS it is valued based on the share price on the date at which the acquisition closed.

In accordance with the guidance in IFRS 1, upon implementation of IFRS, Precision intends to record certain larger drilling rigs located in the United States at fair value as the deemed cost. Precision's project team and management are currently in the process of obtaining valuations for the selected rigs. It is anticipated that the one-time adjustment to the carrying value of these rigs to bring them to their fair value at the time of initial adoption of IFRS is a reduction of carrying value in the range of $125 million to $175 million. The offsetting entry will be recorded in retained earnings. The adjustment to the carrying value is subject to finalization of the valuation estimate and review by Precision's auditor.

Precision has rebuilt historical records as if it had always followed IFRS principles except for those drilling rigs identified in the preceding paragraph. As a result of rebuilding Precision's historical records, there is expected to be a reduction in the opening IFRS net book value for property, plant and equipment of approximately $115 million. The offsetting entry will be recorded in retained earnings as required under IFRS 1.

Capital Assets

Precision's IFRS project team has analyzed the potential impact of component accounting on Precision's financial statements. Based on the data collected by the IFRS team in 2010, it is anticipated that upon adoption of IFRS, annual depreciation and amortization expense will increase by 20% to 30%. This is primarily due to the componentization of drilling rigs into three categories. The additional two categories are meant to better reflect the shorter useful lives of specific assets on the rig.

Upon transition to IFRS, Precision will be required to capitalize borrowing costs on capital projects that take a substantial amount of time to complete. Precision is contemplating capitalizing borrowing costs for projects that take longer than 12 months to complete. This is not expected to have a significant impact on Precision's financial statements.

Internal controls over financial reporting of the Capital and Asset Management process have been reviewed by Precision's IFRS project team. Internal controls under IFRS are expected to remain similar to the controls under Canadian GAAP with the exception of management reports that have been redesigned for transition to IFRS.

Precision's procedures for property, plant and equipment accounting have been revised to reflect changes as a result of transition to IFRS. Precision's budget preparation procedures have also been revised to incorporate the changes resulting from differing treatment of capital and expense items under International Accounting Standards 16, Property, Plant and Equipment.

Precision's IFRS project team has analyzed a number of options for an idle asset depreciation policy and is presently discussing a preferred alternative with senior management.

Financial Statement Disclosure

Sample financial statements were drafted and reviewed by management in the second quarter 2010. In the fourth quarter 2010, management and Precision's IFRS project team intend to further refine the sample financial statements to enable efficient and timely preparation of the first set of fully compliant IFRS statements for the first quarter 2011.

Income Taxes

Precision's Income Tax team continues to work on analyzing and implementing the requirements of IAS 12 Income Taxes.

Impairments

Precision continues to refine its IFRS Impairment test model by testing and reviewing the assumptions used in the model.

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", "propose", "plan", "expect", "believe", "will", "may" 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: global demand for energy is rising; customer demand for oil and natural gas liquids drilling; active rig counts remaining stable or increasing; the rig count and utilization will continue to increase; increased liquidity in capital markets and higher oil commodity prices provide liquidity for customers to increase drilling programs; United States activity levels will continue to improve with oil and gas liquids rich activity leading the way; North American drilling activity levels will be higher in the fourth quarter of 2010 and, in Canada, during the 2011 winter drilling season; amount, timing, and allocation of capital expenditures; the potential for further reduction in natural gas drilling and related activity; the outcome of discussions regarding potential new build opportunities for rigs; the marketability of upgraded rigs; market dayrates will continue to improve; the deployment of new-rig builds and the location thereof; Precision's financial flexibility; Precision's expansion of drilling, directional drilling and international presence; demand for rig personnel and possibility of wage increases offset by higher dayrates; the potential impacts of Precision's transition to IFRS; the effectiveness of Precision's risk management efforts; Precision's continued compliance with its financial covenants and ability to access its credit lines; possibility of further voluntary long-term debt reduction or refinancing; the number of rigs under term contract and the trend to move to spot market dayrates upon expiry; a reduction in gas directed drilling would be offset by an increase in oil and gas liquids rich drilling; and dayrate levels.

These forward-looking information and statements are based on certain assumptions and analysis made by the Corporation in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Corporation's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Corporation's expectations. Such risks and uncertainties include, but are not limited to: fluctuations 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; capital market liquidity available to fund customer drilling programs; the effects of seasonal and weather conditions on operations and facilities; the existence of competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services; general economic, market or business conditions; changes in laws or regulations; the availability of qualified personnel, management or other key inputs; currency exchange fluctuations; and other unforeseen conditions which could impact the use of services supplied by Precision.

Consequently, all of the forward-looking information and statements made in this report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Corporation will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Corporation or its business or operations. Readers are therefore cautioned not to place undue reliance on such forward-looking information and statements. Except as may be required by law, the Corporation assumes no obligation to update publicly any such forward-looking information and statements, whether as a result of new information, future events or otherwise.




CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, December 31,
(stated in thousands of Canadian dollars) 2010 2009
----------------------------------------------------------------------------

ASSETS

Current assets:
Cash $ 208,709 $ 130,799
Accounts receivable 339,366 283,899
Income tax recoverable - 25,753
Inventory 9,733 9,008
----------------------------------------------------------------------------
557,808 449,459

Income tax recoverable 64,579 64,579
Property, plant and equipment,
net of accumulated depreciation 2,811,144 2,913,966
Intangibles 2,055 3,156
Goodwill 752,910 760,553
----------------------------------------------------------------------------
$ 4,188,496 $ 4,191,713
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued liabilities $ 159,212 $ 128,376
Income taxes payable 2,056 -
Current portion of long-term debt (note 6) 4,483 223
----------------------------------------------------------------------------
165,751 128,599

Long-term liabilities 25,511 26,693
Long-term debt (note 6) 679,291 748,725
Future income taxes 701,171 703,195
----------------------------------------------------------------------------
1,571,724 1,607,212
----------------------------------------------------------------------------

Contingencies (note 10)

Shareholders' equity:
Shareholders' capital (note 3) 2,770,853 -
Unitholders' capital (note 3) - 2,770,708
Contributed surplus (note 3(c)) 8,803 4,063
Retained earnings 163,775 107,227
Accumulated other comprehensive loss (note 7) (326,659) (297,497)
----------------------------------------------------------------------------
2,616,772 2,584,501
----------------------------------------------------------------------------
$ 4,188,496 $ 4,191,713
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes to consolidated financial statements


CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (UNAUDITED)

Three months ended Nine months ended
(stated in thousands of September 30, September 30,
Canadian dollars, except
per share amounts) 2010 2009 2010 2009
----------------------------------------------------------------------------

Revenue $ 359,152 $ 253,337 $ 994,116 $ 911,379

Expenses:
Operating 222,465 143,059 631,006 522,411
General and administrative 24,090 24,539 73,116 74,582
Depreciation and
amortization 47,300 30,378 132,288 102,549
Foreign exchange (18,003) (63,486) (11,670) (105,055)
Finance charges (note 9) 21,848 29,396 102,819 112,947
----------------------------------------------------------------------------
Earnings before income
taxes 61,452 89,451 66,557 203,945

Income taxes: (note 4)
Current 608 5,216 4,755 13,380
Future (234) 12,539 5,254 3,977
----------------------------------------------------------------------------
374 17,755 10,009 17,357
----------------------------------------------------------------------------

Net earnings 61,078 71,696 56,548 186,588
Retained earnings
(deficit), beginning of
period 102,697 60,416 107,227 (48,068)
Distributions declared - - - (6,408)
----------------------------------------------------------------------------

Retained earnings , end of
period $ 163,775 $ 132,112 $ 163,775 $ 132,112
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share: (note 11)
Basic $ 0.22 $ 0.26 $ 0.21 $ 0.77
Diluted $ 0.21 $ 0.25 $ 0.20 $ 0.75
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes to consolidated financial statements


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three months ended Nine months ended
September 30, September 30,
(Stated in thousands of
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
Unrealized gain (loss)
recorded on translation of
assets and liabilities of
self-sustaining operations
in foreign currency (52,228) (154,590) (29,162) (265,466)
----------------------------------------------------------------------------
Comprehensive income
(loss) $ 8,850 $ (82,894) $ 27,386 $ (78,878)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes to consolidated financial statements


CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

Three months ended Nine months ended
September 30, September 30,
(stated in thousands of
Canadian dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------

Cash provided by (used in):
Operations:
Net earnings $ 61,078 $ 71,696 $ 56,548 $ 186,588
Adjustments and other items
not involving cash:
Long-term compensation
plans 3,079 4,786 8,884 2,914
Depreciation and
amortization 47,300 30,378 132,288 102,549
Future income taxes (234) 12,539 5,254 3,977
Foreign exchange (18,392) (67,321) (10,595) (118,319)
Amortization of debt issue
costs (note 9) 7,621 7,056 50,400 30,119
Other (2,472) - (1,586) -
Changes in non-cash
working capital balances (30,405) (39,186) (10,990) 226,270
----------------------------------------------------------------------------
67,575 19,948 230,203 434,098

Investments:
Purchase of property,
plant and equipment (35,786) (14,198) (64,953) (179,443)
Proceeds on sale of property,
plant and equipment 2,072 2,428 9,371 10,257
Changes in non-cash
working capital balances 2,395 1,741 7,785 (20,147)
----------------------------------------------------------------------------
(31,319) (10,029) (47,797) (189,333)

Financing:
Repayment of long-term
debt (13,387) (6,567) (103,760) (887,605)
Debt issue costs - (674) (2,165) (21,628)
Re-purchase of trust units
(note 3) - - (6) -
Distributions paid - - - (27,233)
Increase in long-term debt - - - 408,893
Issuance of trust units,
net of issue costs - ( 533) - 413,223
Change in non-cash working
capital balances - (431) - -
----------------------------------------------------------------------------
(13,387) (8,205) (105,931) (114,350)
----------------------------------------------------------------------------

Effect of exchange rate
changes on cash and
cash equivalents (295) (4,164) 1,435 (14,397)
----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 22,574 (2,450) 77,910 116,018
Cash and cash equivalents,
beginning of period 186,135 179,979 130,799 61,511
----------------------------------------------------------------------------

Cash and cash equivalents,
end of period $208,709 $ 177,529 $ 208,709 $ 177,529
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements


Notes to Consolidated Financial Statements (UNAUDITED)

(tabular amounts are stated in thousands of Canadian dollars except share numbers)

1. Description of Business and Basis of Presentation

Precision Drilling Corporation ("Precision" or the "Corporation") is a provider of contract drilling and completion and production services primarily to oil and natural gas exploration and production companies in Canada and the United States.

On June 1, 2010 Precision Drilling Trust (the "Trust") completed its conversion (the "Conversion") from an income trust to a corporation pursuant to a Plan of Arrangement (the "Arrangement"). Pursuant to the Arrangement, Trust unitholders and Exchangeable LP unitholders exchanged their Trust units and Exchangeable LP units for common shares of Precision on a one-for-one basis.

The Conversion has been accounted for on a continuity of interest basis and accordingly these interim financial statements reflect the financial position, results of operations and cash flows as if Precision had always carried on the business formerly carried on by the Trust and were prepared using accounting policies and methods of their application consistent with those used in the preparation of the Trust's consolidated audited financial statements for the year ended December 31, 2009. All references to shares and shareholders in these financial statements pertain to common shares and common shareholders subsequent to the Conversion and units and unitholders prior to the Conversion. These interim financial statements conform in all material respects to the requirements of generally accepted accounting principles in Canada for annual financial statements with the exception of certain note disclosures. As a result, these interim financial statements should be read in conjunction with the Trust's consolidated audited financial statements for the year ended December 31, 2009.

2. Seasonality of Operations

Precision has operations that are carried on in Canada which represent approximately 41% (2009 - 38%) of consolidated total assets as at September 30, 2010 and 52% (2009 - 45%) of consolidated revenue for the nine months ended September 30, 2010. The ability to move heavy equipment in Canadian oil and natural gas fields is dependent on weather conditions. As warm weather returns in the spring, the winter's frost comes out of the ground rendering many secondary roads incapable of supporting the weight of heavy equipment until they have thoroughly dried out. The duration of this "spring break-up" has a direct impact on Precision's activity levels. In addition, many exploration and production areas in northern Canada are accessible only in winter months when the ground is frozen hard enough to support equipment. The timing of freeze up and spring break-up affects the ability to move equipment in and out of these areas. As a result, late March through May is traditionally Precision's slowest time in this region.



3. Shareholders' Capital

(a) Authorized - unlimited number of voting common shares
- unlimited number of preferred shares, issuable in series
(b) Issued:
Common shares Number Amount
----------------------------------------------------------------------------
Balance May 31, 2010 - $ -
Issued pursuant to the Arrangement 275,663,344 2,770,853
----------------------------------------------------------------------------
Balance September 30, 2010 275,663,344 $ 2,770,853
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The following provides a continuity of Trust units and Exchangeable LP units from January 1, 2010 up to the Conversion on June 1, 2010.



Trust units Number Amount
----------------------------------------------------------------------------
Balance December 31, 2009 275,516,778 $ 2,769,338
Issued on redemption of non-management
directors DSU's 28,586 154
Cancellation of units owned by dissenting
unitholders (840) (9)
----------------------------------------------------------------------------
Balance May 31, 2010 275,544,524 $ 2,769,483
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Exchangeable LP units Number Amount
----------------------------------------------------------------------------
Balance December 31, 2009 and May 31, 2010 118,820 $ 1,370
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Summary Number Amount
----------------------------------------------------------------------------
Trust units 275,544,524 $ 2,769,483
Exchangeable LP units 118,820 1,370
----------------------------------------------------------------------------
Unitholders' capital, May 31, 2010 275,663,344 $ 2,770,853
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Pursuant to the Arrangement, any unitholder of the Trust could dissent and be paid the fair value of the units, being the trading price of Trust units at the close of business on the last business day prior to the Annual and Special Meeting of Unitholders on May 11, 2010. As a result a total of 840 units were repurchased for cancellation for six thousand dollars, of which a discount of three thousand dollars over the stated capital was credited to contributed surplus.



(c) Contributed surplus
Amount
----------------------------------------------------------------------------
Balance December 31, 2009 $ 4,063
Share based compensation expense 4,891
Redemption of non-management directors DSU's (154)
Cancellation of units owned by dissenting unitholders 3
----------------------------------------------------------------------------
Balance September 30, 2010 $ 8,803
----------------------------------------------------------------------------
----------------------------------------------------------------------------


4. Income Taxes

The provision for income taxes differs from that which would be expected by applying statutory Canadian income tax rates. A reconciliation of the difference at September 30 is as follows:



Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
----------------------------------------------------------------------------
Earnings before income taxes
$ 61,452 $ 89,451 $ 66,557 $ 203,945
Federal and provincial statutory
rates 28% 29% 28% 29%
----------------------------------------------------------------------------
Tax at statutory rates $ 17,207 $ 25,941 $ 18,636 $ 59,144
Adjusted for the effect of:
Non-deductible expenses 4,879 1,644 5,343 6,372
Non-taxable capital gains (128) (16,248) (128) (16,816)
Income taxed at lower rates (19,191) (1,388) (21,173) (36,812)
Income to be distributed to
unitholders, not subject to tax
in the Trust - (202) - (2,525)
Other (2,393) 8,008 7,331 7,994
----------------------------------------------------------------------------
Income tax expense $ 374 $ 17,755 $ 10,009 $ 17,357
----------------------------------------------------------------------------
----------------------------------------------------------------------------


5. Bank Indebtedness

During the second quarter of 2010 a U.S. subsidiary of the Corporation arranged a new US$15.0 million secured operating facility with a U.S. bank. Advances under this facility are available at the bank's prime lending rate.

In total the Corporation and its subsidiaries have $25.0 million and US$15.0 million of secured operating facilities. At September 30, 2010 no amounts were drawn on these facilities. Availability of the $25.0 million facility was reduced by outstanding letters of credit in the amount of $0.7 million at September 30, 2010.



6. Long-Term Debt

September 30, December 31,
2010 2009
----------------------------------------------------------------------------

Secured facility:
Term Loan A $ 271,018 $ 288,887
Term Loan B 327,208 422,097
Revolving credit facility - -
Unsecured senior notes 175,000 175,000
----------------------------------------------------------------------------
773,226 885,984
Less net unamortized debt issue costs (89,452) (137,036)
----------------------------------------------------------------------------
683,774 748,948
Less current portion (4,483) (223)
----------------------------------------------------------------------------
$ 679,291 $ 748,725
----------------------------------------------------------------------------
----------------------------------------------------------------------------


At September 30, 2010 the Term Loan A facility consists of a term A-1 facility denominated in U.S. dollars in the amount of US$245.3 million and a term A-2 facility denominated in Canadian dollars in the amount of $18.4 million.

At September 30, 2010 the Term Loan B facility consists of a term loan B-1 facility and a term loan B-2 facility denominated in U.S. dollars in the amounts of US$270.3 million and US$47.4 million, respectively.

During the second quarter of 2010, the terms of the secured facility were amended to lower the LIBOR floor for the Term Loan B facility to 1.75% from 3.25% and lower the LIBOR interest rate margin on existing loans under the Term Loan B facility to 5.0% from an average interest rate margin of 6.45%. The secured facility was also amended to provide for the payment in certain circumstances by Precision to lenders under the Term Loan B facility of a fee equal to 1.0% of the aggregate principal amount of loans subsequently prepaid or re-priced under the Term Loan B facility on or prior to September 30, 2011. In connection with the amendments to the secured facility, non-consenting holders of US$74.0 million in loans under the Term Loan B facility were repaid. After the amendment the current blended cash interest cost of Precision's debt is approximately 7.0%.

In addition, the revolving credit facility lending capacity increased by US$150.0 million to US$410.0 million and is available to Precision to finance working capital needs and for general corporate purposes. Availability of the revolving credit facility was reduced at September 30, 2010 by outstanding letters of credit of US$24.9 million.

During the first quarter of 2010 Precision amended certain covenants and terms contained in the secured facility. These amendments included an increase in the leverage ratio test from 3.00:1 to 3.50:1 through December 31, 2011, a decrease in the interest coverage ratio test from 3.00:1 to 2.75:1 through December 31, 2011 and the removal of the restrictions on expansion related capital expenditures (limitations on total capital expenditures remained unchanged).



At September 30, 2010 mandatory principal repayments are as follows:

For the twelve month periods ended September 30,
----------------------------------------------------------------------------
2011 $ 4,483
2012 55,094
2013 71,243
2014 467,406
2015 58,333
Thereafter 116,667
----------------------------------------------------------------------------

7. Accumulated Other Comprehensive Loss

----------------------------------------------------------------------------
Balance, December 31, 2009 $ (297,497)
Unrealized foreign currency translation (29,162)
----------------------------------------------------------------------------
Balance, September 30, 2010 $ (326,659)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


8. Share Based Compensation Plans

The Conversion did not result in any significant changes to Precision's share based compensation plans except that certain elements of the plans that were based on the Trust's unit price prior to the Conversion are now based on Precision's common share price.

(a) Officers and Employees

During 2009 Precision introduced two new share based incentive plans to replace the Performance Saving Plan and the Long-Term Incentive Plan. Under the Restricted Share incentive plan shares granted to eligible employees vest annually over a three year term. Vested shares are automatically paid out in cash in the first quarter of the year following vesting at a value determined by the fair market value of the shares as at December 31 of the vesting year. Under the Performance Share incentive plan shares granted to eligible employees vest at the end of a three year term. Vested shares are automatically paid out in cash in the first quarter following the vested term at a value determined by the fair market value of the shares at December 31 of the vesting year and based on the number of performance shares held multiplied by a performance factor that ranges from zero to two times. The performance factor is based on Precision achieving a predetermined rate of return on capital employed and share price performance compared to a peer group over the three year period. As at September 30, 2010 $2.9 million is included in accounts payable and $7.3 million in long-term liabilities for the plans. Included in net earnings for the three and nine months ended September 30, 2010 is an expense of $2.1 million (2009 - $2.9 million) and $5.6 million (2009 - $5.3 million), respectively.

Notwithstanding that the Performance Savings Plan was replaced in 2009, certain liabilities continue to exist as eligible participants were able to elect to receive a portion of their annual performance bonus in the form of deferred shares. All deferred shares must be redeemed within 60 days of ceasing to be an employee of Precision or by the end of the second full calendar year after receipt. A summary of the deferred shares outstanding under this share based incentive plan is presented below:



Deferred Shares Outstanding
----------------------------------------------------------------------------
Balance, December 31, 2009 245,916
Redeemed on employee resignations and withdrawals (35,419)
----------------------------------------------------------------------------
Balance, September 30, 2010 210,497
----------------------------------------------------------------------------
----------------------------------------------------------------------------


As at September 30, 2010 $1.4 million is included in accounts payable and accrued liabilities for outstanding deferred shares. Included in net earnings for the three and nine months ended September 30, 2010 is an expense recovery of $0.1 million (2009 - $0.5 million expense) and $0.3 million (2009 - $0.8 million expense), respectively.

Precision has a Unit Appreciation Rights ("UAR") plan. Under the plan eligible participants were granted UAR's that entitle the rights holder to receive cash payments calculated as the excess of the market price per common share over the exercise price per UAR on the exercise date. The UAR's vest over a period of 5 years and expire 10 years from the date of grant. No amounts relating to the UAR plan have been recorded as compensation expense or accrued liability as at September 30, 2010 and 2009 as the intrinsic value of the awards was nil.

(b) Executive

In 2007 Precision instituted a Deferred Signing Bonus Share Plan for its Chief Executive Officer. Under the plan 178,336 notional shares were granted on September 1, 2007. The shares were redeemable one-third annually beginning September 1, 2008 and were settled for cash based on the share trading price on redemption. The final tranche from this plan was redeemed during the third quarter of 2010. Included in net earnings for the three months and nine months ended September 30, 2010 is an expense recovery of $20 thousand (2009 - $0.2 million expense) and $60 thousand (2009 - $0.4 million expense recovery), respectively.

(c) Non-management directors

Precision has a deferred share plan for non-management directors. Under the plan fully vested deferred shares are granted quarterly based upon an election by the non-management director to receive all or a portion of their compensation in deferred shares. These deferred shares are redeemable into an equal number of common shares any time after the director's retirement. A summary of deferred shares outstanding under this share based incentive plan is presented below:



Number
Outstanding
----------------------------------------------------------------------------
Balance, December 31, 2009 290,732
Granted 105,381
Redeemed (28,586)
----------------------------------------------------------------------------
Balance, September 30, 2010 367,527
----------------------------------------------------------------------------
----------------------------------------------------------------------------


For the three and nine months ended September 30, 2010 Precision expensed $0.3 million (2009 - $0.3 million) and $0.8 million (2009 - $1.1 million), respectively, as unit based compensation, with a corresponding increase in contributed surplus.

(d) Option plan

Precision has a share option plan under which a combined total of 10,303,253 options to purchase common shares are reserved to be granted to employees. Of the amount reserved, 4,022,925 options have been granted. Under this plan, the exercise price of each option equals the fair market value of the option at the date of grant determined by the weighted average trading price for the five days preceding the grant. The options vest over a period of three years from the date of grant as employees render continuous service to Precision and have a term of seven years.



A summary of the status of the equity incentive plan as at September 30,
2010 is presented below:
Weighted
Range of average
Options exercise exercise Options
outstanding price price exercisable
----------------------------------------------------------------------------
Outstanding as at
December 31, 2009 1,787,700 $ 5.22 - 7.23 $ 5.61 -
Granted 2,093,725 7.33 - 8.59 8.27
Forfeitures (128,000) 5.10 - 8.59 6.12
----------------------------------------------------------------------------
Outstanding as at
September 30, 2010 3,753,425 $ 5.10 - 8.59 $ 7.13 571,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The weighted average fair value of the options granted during 2010 was $3.78 per option estimated on the grant date using the Black-Scholes option pricing model with the following assumption: average risk-free interest rate 2.2%, average expected life of four years, expected forfeiture rate of 5% and expected volatility of 59%. Included in net earnings for the three and nine months ended September 30, 2010 is an expense of $1.3 million (2009 - $0.9 million) and $4.1 million (2009 - $1.1 million), respectively.



9. Finance Charges

The following table provides a summary of the finance charges:

Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
----------------------------------------------------------------------------
Interest:
Long-term debt $ 14,533 $ 21,794 $ 51,893 $ 80,262
Other 31 635 63 2,856
Income (337) (89) (534) (290)
Amortization of debt issue costs 7,017 7,056 24,777 20,220
Accelerated amortization of debt
issue costs from voluntary debt
repayments 604 - 1,590 -
Loss on settlement of debt
facilities - - 25,030 9,899
----------------------------------------------------------------------------
Finance charges $ 21,848 $ 29,396 $ 102,819 $ 112,947
----------------------------------------------------------------------------
----------------------------------------------------------------------------


10. Contingencies

The business and operations of Precision are complex and Precision has executed a number of significant financings, business combinations, acquisitions and dispositions over the course of its history. The computation of income taxes payable as a result of these transactions involves many complex factors as well as Precision's interpretation of relevant tax legislation and regulations. Precision's management believes that the provision for income tax is adequate and in accordance with generally accepted accounting principles and applicable legislation and regulations. However, there are a number of tax filing positions that can still be the subject of review by taxation authorities who may successfully challenge Precision's interpretation of the applicable tax legislation and regulations, with the result that additional taxes could be payable by Precision and the amount owed, with estimated interest but without penalties, could be up to $412 million, including the estimated amount pertaining to the long-term income tax recoverable.

11. Per Share Amounts

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



Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
----------------------------------------------------------------------------
Net earnings - basic $ 61,078 $ 71,696 $ 56,548 $ 186,588
Impact of assumed conversion of
convertible debt, net of tax - - - 1,723
----------------------------------------------------------------------------
Net earnings - diluted $ 61,078 $ 71,696 $ 56,548 $ 188,311
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Weighted average shares outstanding
- basic 275,663 275,636 275,650 233,119
Effect of rights offering - - - 8,236
----------------------------------------------------------------------------
Weighted average shares outstanding
- basic 275,663 275,636 275,650 241,355

Effect of common share warrants 8,161 7,335 8,629 4,227
Effect of share options and other
equity compensation plans 490 218 550 155
Effect of convertible debt - - - 5,195
Effect of rights offering - - - 456
----------------------------------------------------------------------------
Weighted average shares outstanding
- diluted 284,314 283,189 284,829 251,388
----------------------------------------------------------------------------
----------------------------------------------------------------------------


12. Segmented Information

Precision operates primarily in Canada and the United States, in two segments; Contract Drilling Services and Completion and Production Services. Contract Drilling Services includes drilling rigs, procurement and distribution of oilfield supplies, camp and catering services and manufacture, sale, and repair of drilling equipment. Completion and Production Services includes service rigs, snubbing units, wastewater treatment units, and oilfield equipment rental.



Completion
Contract and
Three months ended Drilling Production Corporate Inter-segment
September 30, 2010 Services Services and Other Eliminations Total
----------------------------------------------------------------------------

Revenue $ 305,813 $ 55,209 $ - $ (1,870) $ 359,152
Segment profit
(loss) 65,297 9,973 (9,973) - 65,297
Depreciation and
amortization 40,509 5,611 1,180 - 47,300
Total assets 3,502,044 388,220 298,232 - 4,188,496
Goodwill 640,771 112,139 - - 752,910
Capital
expenditures 30,416 3,613 1,757 - 35,786
----------------------------------------------------------------------------


Completion
Contract and
Three months ended Drilling Production Corporate Inter-segment
September 30, 2009 Services Services and Other Eliminations Total
----------------------------------------------------------------------------

Revenue $ 216,391 $ 38,738 $ - $ (1,792) $ 253,337
Segment profit
(loss) 60,484 4,536 (9,659) - 55,361
Depreciation and
amortization 25,610 3,714 1,054 - 30,378
Total assets 3,721,044 399,172 240,645 - 4,360,861
Goodwill 660,060 112,139 - - 772,199
Capital
expenditures 11,862 501 1,835 - 14,198
----------------------------------------------------------------------------


Completion
Contract and
Nine months ended Drilling Production Corporate Inter-segment
September 30, 2010 Services Services and Other Eliminations Total
----------------------------------------------------------------------------

Revenue $ 845,515 $ 156,239 $ - $ (7,638) $ 994,116
Segment profit
(loss) 167,003 20,737 (30,034) - 157,706
Depreciation and
amortization 112,562 16,164 3,562 - 132,288
Total assets 3,502,044 388,220 298,232 - 4,188,496
Goodwill 640,771 112,139 - - 752,910
Capital
expenditures 55,090 6,246 3,617 - 64,953
----------------------------------------------------------------------------


Completion
Contract and
Nine months ended Drilling Production Corporate Inter-segment
September 30,2009 Services Services and Other Eliminations Total
----------------------------------------------------------------------------

Revenue $ 791,496 $ 127,303 $ - $ (7,420) $ 911,379
Segment profit
(loss) 221,536 17,411 (27,110) - 211,837
Depreciation and
amortization 87,007 12,405 3,137 - 102,549
Total assets 3,721,044 399,172 240,645 - 4,360,861
Goodwill 660,060 112,139 - - 772,199
Capital
expenditures 171,769 1,022 6,652 - 179,443
----------------------------------------------------------------------------


A reconciliation of segment profit to earnings before income taxes is as
follows:

Three months ended Nine months ended
(Stated in thousands of Canadian September 30, September 30,
dollars) 2010 2009 2010 2009
----------------------------------------------------------------------------
Total segment profit $ 65,297 $ 55,361 $ 157,706 $ 211,837
Add (deduct):
Foreign exchange 18,003 63,486 11,670 105,055
Finance charges (21,848) (29,396) (102,819) (112,947)
----------------------------------------------------------------------------
Earnings before income taxes $ 61,452 $ 89,451 $ 66,557 $ 203,945
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Precision's operations are carried on in the following geographic locations:

Three months ended
September 30, United Inter-segment
2010 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 184,302 $ 168,759 $ 7,252 $ (1,161) $ 359,152
Total assets 1,702,228 2,428,838 57,430 - 4,188,496
----------------------------------------------------------------------------


Three months ended
September 30, United Inter-segment
2009 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 126,690 $ 120,872 $ 6,148 $ (373) $ 253,337
Total assets 1,671,133 2,632,495 57,233 - 4,360,861
----------------------------------------------------------------------------


Nine months ended
September 30, United Inter-segment
2010 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 517,434 $ 459,516 $ 19,671 $ (2,505) $ 994,116
Total assets 1,702,228 2,428,838 57,430 - 4,188,496
----------------------------------------------------------------------------


Nine months ended
September 30, United Inter-segment
2009 Canada States International Elimination Total
----------------------------------------------------------------------------
Revenue $ 410,987 $ 484,747 $ 18,627 $ (2,982) $ 911,379
Total assets 1,671,133 2,632,495 57,233 - 4,360,861
----------------------------------------------------------------------------


THIRD QUARTER 2010 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, 2010.

The conference call dial in numbers are 1-877-440-9795 or 416-340-8527

A live webcast of the conference call will be accessible on Precision's website at www.precisiondrilling.com by selecting "Investor Centre", then "Webcasts". Shortly after the live webcast, an archived version will be available for approximately 30 days.

An archived recording of the conference call will be available approximately one hour after the completion of the call until October 28, 2010 by dialing 1-800-408-3053 or 416-695-5800, pass code 3051552.

About Precision

Precision is a leading provider of safe, high performance energy services to the North American oil and gas industry. Precision provides customers with access to an extensive fleet of contract drilling rigs, service rigs, camps, snubbing units, wastewater treatment units and rental equipment 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".

Contact Information

  • Precision Drilling Corporation
    David Wehlmann
    Executive Vice President, Investor Relations
    403.716.4575
    403.716.4755 (FAX)
    or
    Precision Drilling Corporation
    4200, 150 - 6th Avenue S.W.
    Calgary, Alberta, Canada T2P 3Y7
    www.precisiondrilling.com