GlobeNewswire Inc | Oct 21, 2021 06:01AM EDT

October 21, 2021

CALGARY, Alberta, Oct. 21, 2021 (GLOBE NEWSWIRE) -- This news release contains forward-looking information and statements within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the Cautionary Statement Regarding Forward-Looking Information and Statements later in this news release. This news release contains references to Adjusted EBITDA (earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, gain on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Covenant EBITDA, Operating Earnings (Loss), Funds Provided by (Used in) Operations and Working Capital. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures used by other companies, see Non-GAAP Measures later in this news release.

Precision Drilling announces 2021 third quarter financial results:

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

Precisions President and CEO Kevin Neveu stated:

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

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

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

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

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

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

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

Our international drilling operations continue at a steady pace with6 rigs active in Kuwait and the Kingdom of Saudi Arabia. During the quarter, we received extension notifications for two Kuwait rig contracts, each for one-year. Regional bidding activity is robust, and we see opportunities to activate several of our idle rigs in the region early next year and are confident in our likelihood of success.

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

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

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

For the three months ended September30, For the nine months ended September30, (Stated inthousands ofCanadian 2021 2020 % Change 2021 2020 % Change dollars,except pershare amounts)Revenue 253,813 164,822 54.0 691,645 734,065 (5.8 )Adjusted 45,408 47,771 (4.9 ) 128,891 208,140 (38.1 )EBITDA^(^1)Operatingearnings (20,762 ) (26,785 ) (22.5 ) (76,033 ) (23,375 ) 225.3 (loss)^(^1)Net loss (38,032 ) (28,476 ) 33.6 (150,050 ) (82,620 ) 81.6 Cash provided 21,871 41,950 (47.9 ) 79,512 221,381 (64.1 )by operationsFunds providedby operations^ 33,525 27,489 22.0 89,562 135,445 (33.9 )(^1)Capital spending:Expansion and 5,998 - n.m. 15,881 13,764 15.4 upgradeMaintenanceand 13,502 3,211 320.5 32,310 24,859 30.0 infrastructureIntangibles - - n.m. - 57 (100.0 )Proceeds on (4,476 ) (5,705 ) (21.5 ) (10,390 ) (16,416 ) (36.7 )saleNet capital 15,024 (2,494 ) (702.4 ) 37,801 22,264 69.8 spendingNet loss per share:Basic (2.86 ) (2.08 ) 37.4 (11.27 ) (6.02 ) 87.2 Diluted (2.86 ) (2.08 ) 37.4 (11.27 ) (6.02 ) 87.2

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

Operating Highlights

For the three months ended For the nine months ended September30, September30, 2021 2020 % Change 2021 2020 % Change Contractdrilling rig 227 227 - 227 227 - fleetDrilling rigutilization days:U.S. 3,785 1,957 93.4 10,315 9,684 6.5 Canada 4,648 1,613 188.2 10,963 8,216 33.4 International 552 559 (1.3 ) 1,638 1,974 (17.0 )Revenue perutilization day:U.S.^(^1) 20,331 28,334 (28.2 ) 20,904 26,335 (20.6 )(US$)Canada (Cdn$) 19,427 21,430 (9.3 ) 20,295 21,593 (6.0 )International 52,277 54,887 (4.8 ) 53,095 54,631 (2.8 )(US$)Operatingcost per utilizationday:U.S. (US$) 15,120 16,037 (5.7 ) 14,639 14,727 (0.6 )Canada (Cdn$) 13,189 12,924 2.1 13,204 13,940 (5.3 ) Service rig 123 123 - 123 123 - fleetService rigoperating 32,244 15,599 106.7 93,777 54,666 71.5 hours

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

Financial Position

(Stated in thousands of Canadian September30, December31,2020 dollars, except ratios) 2021Working capital^(^1) 120,259 175,423 Cash 57,096 108,772 Long-term debt 1,162,841 1,236,210 Total long-term financial 1,241,708 1,304,162 liabilitiesTotal assets 2,720,415 2,898,878 Long-term debt to long-term debt 0.48 0.47 plus equity ratio

(1)See NON-GAAP MEASURES.

Summary for the three months ended September 30, 2021:

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

Summary for the nine months ended September 30, 2021:

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

STRATEGY

Precisions strategic priorities for 2021 are as follows:

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

OUTLOOK

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

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

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

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

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

Contracts

Year to date in 2021 we have entered into 28 term contracts. The following chart outlines the average number of drilling rigs under contract by quarter as of October 20, 2021. For those quarters ending after September 30, 2021, this chart represents the minimum number of long-term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional contracts.

Average for the quarter ended 2020 Average for the quarter ended 2021 Mar. June Sept. Dec. Mar. June Sept. Dec. 31 30 30 31 31 30 30 31Average rigsunder termcontract as of October20, 2021:U.S. 41 32 26 24 21 24 22 22 Canada 5 4 3 4 6 6 7 7 International 8 8 6 6 6 6 6 6 Total 54 44 35 34 33 36 35 35

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

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

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

Drilling Activity

The following chart outlines the average number of drilling rigs that we had working or moving by quarter for the periods noted.

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

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

Capital Spending

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

SEGMENTED FINANCIAL RESULTS

For the three months ended September30, For the nine months ended September30, (Stated inthousands of 2021 2020 % Change 2021 2020 % Change Canadiandollars)Revenue: ContractDrilling 226,957 150,773 50.5 613,032 682,060 (10.1 )ServicesCompletionand 28,143 14,443 94.9 81,354 53,631 51.7 ProductionServicesInter-segment (1,287 ) (394 ) 226.6 (2,741 ) (1,626 ) 68.6 eliminations 253,813 164,822 54.0 691,645 734,065 (5.8 )Adjusted EBITDA:^(1)ContractDrilling 55,384 51,594 7.3 163,118 236,940 (31.2 )ServicesCompletionand 5,479 3,945 38.9 17,533 5,960 194.2 ProductionServicesCorporate and (15,455 ) (7,768 ) 99.0 (51,760 ) (34,760 ) 48.9 Other 45,408 47,771 (4.9 ) 128,891 208,140 (38.1 )

(1)See NON-GAAP MEASURES.

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

For the three months ended September30, For the nine months ended September30, (Stated inthousands ofCanadian 2021 2020 % Change 2021 2020 % Change dollars,except wherenoted)Revenue 226,957 150,773 50.5 613,032 682,060 (10.1 )Expenses: Operating 164,521 93,669 75.6 429,036 417,496 2.8 General and 7,052 5,151 36.9 20,878 20,004 4.4 administrativeRestructuring - 359 (100.0 ) - 7,620 (100.0 )Adjusted 55,384 51,594 7.3 163,118 236,940 (31.2 )EBITDA^(^1)Depreciation 62,751 70,675 (11.2 ) 191,084 220,461 (13.3 )Gain on asset (3,035 ) (2,684 ) 13.1 (5,355 ) (8,617 ) (37.9 )disposalsOperatingearnings (4,332 ) (16,397 ) (73.6 ) (22,611 ) 25,096 (190.1 )(loss)^(^1)Operatingearnings(loss)^(^1) as (1.9 )% (10.9 )% (3.7 )% 3.7 % a percentageof revenue

(1)See NON-GAAP MEASURES.

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

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

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

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

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

For the three months ended For the nine months ended September30, September30,(Stated inthousands ofCanadian 2021 2020 % Change 2021 2020 dollars,except wherenoted)Revenue 28,143 14,443 94.9 81,354 53,631 51.7 Expenses: Operating 21,188 9,872 114.6 59,703 42,056 42.0 General and 1,476 626 135.8 4,118 3,020 36.4 administrativeRestructuring - - n.m. - 2,595 (100.0 )Adjusted 5,479 3,945 38.9 17,533 5,960 194.2 EBITDA^(^1)Depreciation 4,004 4,014 (0.2 ) 11,859 12,416 (4.5 )Gain on asset (95 ) (236 ) (59.7 ) (551 ) (1,237 ) (55.5 )disposalsOperatingearnings 1,570 167 840.1 6,225 (5,219 ) (219.3 )(loss)^(^1)Operatingearnings(loss)^(^1) as 5.6 % 1.2 % 7.7 % (9.7 )% a percentageof revenueWell servicing statistics:Number ofservice rigs 123 123 - 123 123 - (end ofperiod)Service rigoperating 32,244 15,599 106.7 93,777 54,666 71.5 hoursService rigoperating hour 28 % 14 % 28 % 16 % utilization

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

SEGMENT REVIEW OF CORPORATE AND OTHER

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

OTHER ITEMS

Share-based Incentive Compensation Plans

We have several cash and equity-settled share-based incentive plans for non-management directors, officers, and other eligible employees. Our accounting policies for each share-based incentive plan can be found in our 2020 Annual Report.

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

For the three months For the nine months ended September30, ended September30,(Stated in thousands 2021 2020 2021 2020 of Canadian dollars)Cash settledshare-based 11,839 971 46,537 (50 )incentive plansEquity settledshare-based incentive plans:Executive PSU 1,468 2,434 3,639 8,128 Stock option plan 34 160 199 714 Total share-basedincentive 13,341 3,565 50,375 8,792 compensation planexpense (recovery) Allocated: Operating 3,272 740 11,437 1,754 General and 10,069 2,825 38,938 7,038 Administrative 13,341 3,565 50,375 8,792

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

Finance Charges

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

Income Tax

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Amount Availability Used for MaturitySenior credit facility (secured)US$500 million^1 US$161 million drawn and(extendible, revolving US$31 million in General June 18,term credit facility outstanding letters of corporate 2025^1with US$300 million credit purposesaccordion feature)Real estate credit facilities (secured) General NovemberUS$10 million Fully drawn corporate 19, 2025 purposes General March$19 million Fully drawn corporate 16, 2026 purposesOperating facilities (secured) Undrawn, except $7 million Letters of in credit and$40 million outstanding letters of general credit corporate purposes Short-termUS$15 million Undrawn working capital requirementsDemand letter of credit facility (secured) Undrawn, except US$3US$30 million million in Letters of outstanding letters of credit creditUnsecured senior notes (unsecured) DebtUS$348 million ? 7.125% Fully drawn redemption January and 15, 2026 repurchases DebtUS$400 million ? 6.875% Fully drawn redemption January and 15, 2029 repurchases

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

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

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

Covenants

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

Covenant At September30, 2021Senior Credit Facility Consolidated senior debt to consolidated < 2.50 1.33 covenant EBITDA^(^1)Consolidated covenant EBITDA to consolidated > 1.75 1.96 interest expenseReal Estate Credit Facilities Consolidated covenant EBITDA to consolidated > 1.75 1.96 interest expense

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

Average shares outstanding

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

For the three months For the nine months ended September30, ended September30,(Stated in thousands) 2021 2020 2021 2020 Weighted average shares 13,304 13,724 13,319 13,736 outstanding ? basicEffect of stock options andother equity compensation ? ? ? ? plansWeighted average shares 13,304 13,724 13,319 13,736 outstanding ? diluted

QUARTERLY FINANCIAL SUMMARY

(Stated inthousandsof Canadiandollars, 2020 2021 except pershareamounts)Quarters December March 31 June 30 September ended 31 30Revenue 201,688 236,473 201,359 253,813 Adjusted 55,263 54,539 28,944 45,408 EBITDA^(^1)Net loss (37,518 ) (36,106 ) (75,912 ) (38,032 )Net lossper basic (2.74 ) (2.70 ) (5.71 ) (2.86 )and dilutedshareFundsprovided by 35,282 43,430 12,607 33,525 operations^(^1)Cashprovided by 4,737 15,422 42,219 21,871 operations

(Stated inthousandsof Canadiandollars, 2019 2020 except pershareamounts)Quarters December March 31 June 30 September ended 31 30Revenue 372,301 379,484 189,759 164,822 Adjusted 105,006 101,904 58,465 47,771 EBITDA^(^1)Net loss (1,061 ) (5,277 ) (48,867 ) (28,476 )Net lossper basic (0.08 ) (0.38 ) (3.56 ) (2.08 )and dilutedshareFundsprovided by 75,779 81,317 26,639 27,489 operations^(^1)Cashprovided by 74,981 74,953 104,478 41,950 operations

(1)See NON-GAAP MEASURES.

NON-GAAP MEASURES

In this release we reference non-GAAP (Generally Accepted Accounting Principles) measures. Adjusted EBITDA, Covenant EBITDA, Operating Earnings (Loss), Funds Provided by (Used in) Operations and Working Capital are terms used by us to assess performance as we believe they provide useful supplemental information to investors. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures used by other companies.

Adjusted EBITDA

We believe that Adjusted EBITDA (earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, loss (gain) on investments and other assets, finance charges, foreign exchange, gain on assets disposals and depreciation and amortization), as reported in the Interim Consolidated Statement of Net Loss, is a useful measure, because it gives an indication of the results from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.

Covenant EBITDA

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

Operating Earnings (Loss)

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

For the three months For the nine months ended September30, ended September30,(Stated in thousands of 2021 2020 2021 2020 Canadian dollars)Revenue 253,813 164,822 691,645 734,065 Expenses: Operating 184,422 103,147 485,998 457,926 General and 23,983 11,954 76,756 49,938 administrativeRestructuring ? 1,950 ? 18,061 Depreciation and 69,431 77,588 211,148 241,626 amortizationGain on asset disposals (3,261 ) (3,032 ) (6,224 ) (10,111 )Operating earnings (20,762 ) (26,785 ) (76,033 ) (23,375 )(loss)Foreign exchange 464 1,161 104 2,924 Finance charges 20,639 27,613 70,783 83,276 Gain on investments and (327 ) ? (327 ) ? other assetsLoss (gain) onrepurchase of unsecured ? (27,971 ) 9,520 (29,942 )notesLoss before income taxes (41,538 ) (27,588 ) (156,113 ) (79,633 )

Funds Provided By (Used In) Operations

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

Working Capital

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

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

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

-- our strategic priorities for 2021; -- our capital expenditure plans for 2021; -- anticipated activity levels in 2021; -- anticipated demand for our drilling rigs; -- the average number of term contracts in place for 2021; -- anticipated cash savings and liquidity; -- customer adoption of Alpha technologies; -- potential commercial opportunities and rig contract renewals; and -- our future debt reduction plans.

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

-- the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets; -- the success of our response to the COVID-19 global pandemic; -- the status of current negotiations with our customers and vendors; -- customer focus on safety performance; -- existing term contracts are neither renewed nor terminated prematurely; -- our ability to deliver rigs to customers on a timely basis; and -- the general stability of the economic and political environments in the jurisdictions where we operate.

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

-- volatility in the price and demand for oil and natural gas; -- fluctuations in the level of oil and natural gas exploration and development activities; -- fluctuations in the demand for contract drilling, well servicing and ancillary oilfield services; -- our customers inability to obtain adequate credit or financing to support their drilling and production activity; -- the success of vaccinations for COVID-19 worldwide; -- changes in drilling and well servicing technology, which could reduce demand for certain rigs or put us at a competitive advantage; -- shortages, delays and interruptions in the delivery of equipment supplies and other key inputs; -- liquidity of the capital markets to fund customer drilling programs; -- availability of cash flow, debt and equity sources to fund our capital and operating requirements, as needed; -- the impact of weather and seasonal conditions on operations and facilities; -- competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services; -- ability to improve our rig technology to improve drilling efficiency; -- general economic, market or business conditions; -- the availability of qualified personnel and management; -- a decline in our safety performance which could result in lower demand for our services; -- changes in laws or regulations, including changes in environmental laws and regulations such as increased regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and greenhouse gas emissions, which could have an adverse impact on the demand for oil and natural gas; -- terrorism, social, civil and political unrest in the foreign jurisdictions where we operate; -- fluctuations in foreign exchange, interest rates and tax rates; and -- other unforeseen conditions which could impact the use of services supplied by Precision and Precisions ability to respond to such conditions.

Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precisions Annual Information Form for the year ended December 31, 2020, which may be accessed on Precisions SEDAR profile at www.sedar.com or under Precisions EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this release are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian September30, December31, dollars) 2021 2020ASSETS Current assets: Cash $ 57,096 $ 108,772 Accounts receivable 249,553 207,209 Inventory 25,770 26,282 Total current assets 332,419 342,263 Non-current assets: Deferred tax assets 1,098 1,098 Right-of-use assets 52,337 55,168 Property, plant and equipment 2,301,873 2,472,683 Intangibles 25,087 27,666 Investments and other assets 7,601 ? Total non-current assets 2,387,996 2,556,615 Total assets $ 2,720,415 $ 2,898,878 LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued $ 198,129 $ 150,957 liabilitiesIncome taxes payable 654 3,702 Current portion of lease obligations 11,152 11,285 Current portion of long-term debt 2,225 896 Total current liabilities 212,160 166,840 Non-current liabilities: Share-based compensation 25,430 11,507 Provisions and other 6,934 7,563 Lease obligations 46,503 48,882 Long-term debt 1,162,841 1,236,210 Deferred tax liabilities 12,600 21,236 Total non-current liabilities 1,254,308 1,325,398 Shareholders? equity: Shareholders? capital 2,281,444 2,285,738 Contributed surplus 76,753 72,915 Deficit (1,239,644 ) (1,089,594 )Accumulated other comprehensive income 135,394 137,581 Total shareholders? equity 1,253,947 1,406,640 Total liabilities and shareholders? $ 2,720,415 $ 2,898,878 equity

CONDENSEDINTERIM CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)

Three Months Ended NineMonthsEnded September30, September30,(Stated in thousandsof Canadian dollars, 2021 2020 2021 2020 except per shareamounts) Revenue $ 253,813 $ 164,822 $ 691,645 $ 734,065 Expenses: Operating 184,422 103,147 485,998 457,926 General and 23,983 11,954 76,756 49,938 administrativeRestructuring ? 1,950 ? 18,061 Earnings before incometaxes, loss (gain) onrepurchaseof unsecured seniornotes, gain oninvestments and 45,408 47,771 128,891 208,140 other assets, financecharges, foreignexchange, gain onasset disposals anddepreciation andamortizationDepreciation and 69,431 77,588 211,148 241,626 amortizationGain on asset (3,261 ) (3,032 ) (6,224 ) (10,111 )disposalsForeign exchange 464 1,161 104 2,924 Finance charges 20,639 27,613 70,783 83,276 Gain on investments (327 ) ? (327 ) ? and other assetsLoss (gain) onrepurchase of ? (27,971 ) 9,520 (29,942 )unsecured senior notesLoss before income (41,538 ) (27,588 ) (156,113 ) (79,633 )taxesIncome taxes: Current 890 2,946 2,462 6,121 Deferred (4,396 ) (2,058 ) (8,525 ) (3,134 ) (3,506 ) 888 (6,063 ) 2,987 Net loss $ (38,032 ) $ (28,476 ) $ (150,050 ) $ (82,620 )Net loss per share: Basic $ (2.86 ) $ (2.08 ) $ (11.27 ) $ (6.02 )Diluted $ (2.86 ) $ (2.08 ) $ (11.27 ) $ (6.02 )

CONDENSEDINTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

Three Months Ended NineMonthsEnded September30, September30,(Stated in thousands of Canadian 2021 2020 2021 2020 dollars)Net loss $ (38,032 ) $ (28,476 ) $ (150,050 ) $ (82,620 )Unrealizedgain(loss)ontranslationofassetsand 33,364 (36,384 ) (9,182 ) 49,313 liabilities of operationsdenominated in foreign currencyForeignexchangegain(loss)onnetinvestmenthedge (24,544 ) 29,404 6,995 (34,832 )withU.S.denominateddebtComprehensive loss $ (29,212 ) $ (35,456 ) $ (152,237 ) $ (68,139 )

CONDENSEDINTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended NineMonthsEnded September30, September30,(Stated in thousands 2021 2020 2021 2020 of Canadian dollars)Cash provided by (used in):Operations: Net loss $ (38,032 ) $ (28,476 ) $ (150,050 ) $ (82,620 )Adjustments for: Long-term 7,887 3,106 28,688 8,727 compensation plansDepreciation and 69,431 77,588 211,148 241,626 amortizationGain on asset (3,261 ) (3,032 ) (6,224 ) (10,111 )disposalsForeign exchange 415 1,293 1,437 2,447 Finance charges 20,639 27,613 70,783 83,276 Income taxes (3,506 ) 888 (6,063 ) 2,987 Other 2 (142 ) (562 ) (905 )Gain on investments (327 ) ? (327 ) ? and other assetsLoss (gain) onrepurchase of ? (27,971 ) 9,520 (29,942 )unsecured seniornotesIncome taxes paid (1,134 ) (2,137 ) (5,200 ) (6,085 )Income taxes 44 1,228 47 1,228 recoveredInterest paid (18,804 ) (22,644 ) (63,982 ) (75,687 )Interest received 171 175 347 504 Funds provided by 33,525 27,489 89,562 135,445 operationsChanges in non-cashworking capital (11,654 ) 14,461 (10,050 ) 85,936 balances 21,871 41,950 79,512 221,381 Investments: Purchase ofproperty, plant and (19,500 ) (3,211 ) (48,191 ) (38,623 )equipmentPurchase of ? ? ? (57 )intangiblesProceeds on sale ofproperty, plant and 4,476 5,705 10,390 16,416 equipmentPurchase ofinvestments and (3,000 ) ? (3,000 ) ? other assetsChanges in non-cashworking capital 500 (1,367 ) 3,213 (6,773 )balances (17,524 ) 1,127 (37,588 ) (29,037 )Financing: Issuance of ? 123,029 696,341 128,059 long-term debtRepayments of (8,209 ) (158,921 ) (769,668 ) (204,386 )long-term debtRepurchase of share ? ? (4,294 ) (5,259 )capitalDebt issuance costs 344 ? (9,450 ) ? Debt amendment fees (3 ) (22 ) (913 ) (690 )Lease payments (1,633 ) (1,987 ) (4,963 ) (5,612 )Changes in non-cashworking capital (1,829 ) ? ? ? balances (11,330 ) (37,901 ) (92,947 ) (87,888 )Effect of exchange 642 (2,516 ) (653 ) (1,372 )rate changes on cashIncrease (decrease) (6,341 ) 2,660 (51,676 ) 103,084 in cashCash, beginning of 63,437 175,125 108,772 74,701 periodCash, end of period $ 57,096 $ 177,785 $ 57,096 $ 177,785

CONDENSEDINTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(Stated in Accumulatedthousands of Shareholders? Contributed Other Deficit Total Canadian Capital Surplus Comprehensive Equitydollars) IncomeBalance at $ 2,285,738 $ 72,915 $ 137,581 $ (1,089,594 ) $ 1,406,640 January 1, 2021Net loss for the ? ? ? (150,050 ) (150,050 )periodOthercomprehensive ? ? (2,187 ) ? (2,187 )loss for theperiodShare (4,294 ) ? ? ? (4,294 )repurchasesShare-basedcompensation ? (2,349 ) ? ? (2,349 )reclassificationShare-basedcompensation ? 6,187 ? ? 6,187 expenseBalance atSeptember30, $ 2,281,444 $ 76,753 $ 135,394 $ (1,239,644 ) $ 1,253,947 2021

(Stated in Accumulatedthousands of Shareholders? Contributed Other Deficit Total Canadian Capital Surplus Comprehensive Equitydollars) IncomeBalance at $ 2,296,378 $ 66,255 $ 134,255 $ (969,456 ) $ 1,527,432 January 1, 2020Net loss for the ? ? ? (82,620 ) (82,620 )periodOthercomprehensive ? ? 14,481 ? 14,481 income for theperiodShare (5,259 ) ? ? ? (5,259 )repurchasesRedemption ofnon-management 677 (502 ) ? ? 175 director DSUsShare-basedcompensation ? (1,498 ) ? ? (1,498 )reclassificationShare-basedcompensation ? 8,842 ? ? 8,842 expenseBalance atSeptember30, $ 2,291,796 $ 73,097 $ 148,736 $ (1,052,076 ) $ 1,461,553 2020

THIRD QUARTER 2021 EARNINGS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on Thursday, October 21, 2021.

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

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

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

About Precision

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

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

For further information, please contact:

Carey Ford, Senior Vice President and Chief Financial Officer713.435.6100

800, 525 - 8th Avenue S.W.Calgary, Alberta, Canada T2P 1G1Website: www.precisiondrilling.com