CALGARY, Alberta, Oct. 27, 2022 (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 certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, gain (loss) on investments and other assets, loss on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending and Working Capital. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures used by other companies, see “Financial Measures and Ratios” later in this news release.

Precision Drilling announces 2022 third quarter financial results and highlights:

• Realized $429 million of revenue during the quarter, an increase of 69% over the same period last year and 32% compared to the previous quarter.
• Increased North American drilling activity by 27% compared to the third quarter of 2021 and achieved average day rates of US$27,847 in the U.S. and $26,927 in Canada.
• Achieved Adjusted EBITDA (see “FINANCIAL MEASURES AND RATIOS”) of $120 million, a 163% increase from $45 million in the prior year quarter as we continue to maximize our operating leverage in a growing activity environment. Adjusted EBITDA included $6 million of share-based compensation charges and $4 million of non-recurring costs associated with the High Arctic Energy Services Inc. (High Arctic) transaction, severance costs and mobilization of a drilling rig from the U.S. to Canada.
• Generated net earnings of $31 million or $2.26 per share compared with a net loss of $38 million or $2.86 per share in third quarter of 2021.
• Continued to scale our Alpha™ technologies across our Super Triple rig fleet, increasing our Alpha™ revenue over 50% compared to the same period last year.
• Strengthened our contract book with 23 additions, bringing our year-to-date total to 61 term contracts.
• Successfully integrated the acquired well servicing business and associated rental assets of High Arctic. During the quarter, the Completion and Production Services segment generated revenue of $57 million and Adjusted EBITDA of $15 million, representing increases of 101% and 170%, respectively, from the prior year’s third quarter.
• Generated cash and funds from operations (see “FINANCIAL MEASURES AND RATIOS”) of $8 million and $81 million, respectively, as compared with $22 million and $34 million in the third quarter of 2021.
• Repurchased and cancelled 69,599 common shares for $5 million under our Normal Course Issuer Bid (NCIB).
• Ended the quarter with $40 million of cash, US$141 million drawn on our Senior Credit Facility and more than $540 million of available liquidity. We remain on track to reduce our debt by $75 million in 2022.
• Increased our capital spending plan from $149 million to $165 million in response to higher drilling and service activity and expected customer contracted upgrades on over 30 drilling rigs in 2022.
• Subsequent to September 30, 2022, we were awarded four five-year drilling contracts in the Middle East that will increase our active rig count in the region to eight rigs by the middle of 2023.

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

“I am very pleased to see Precision’s financial performance return to profitability as the recovery in customer demand continues to gain momentum and now spans all geographies and services we provide. During the quarter, we delivered net earnings of $2.26 per share, which were positive for the first time since 2019. Revenue and Adjusted EBITDA increased an impressive 32% and 87%, respectively, from the second quarter and 69% and 163% compared to the third quarter of last year. Our improved financial performance demonstrates our operational leverage and is a function of improved utilization, record drilling day rates, Alpha™ and EverGreen™ growth, and a continued intense focus on cost control. With strong demand for our services, tight rig supply and pricing momentum on leading-edge day rates, we expect fleet average day rates and operating margins to continue trending upward well into 2023.

“Precision’s drilling activity continues to increase in North America as our customers remain committed to their drilling plans, despite volatility in oil and natural gas prices. In the U.S., we averaged 57 active drilling rigs during the third quarter and are currently operating 61 rigs, a 20% increase from the beginning of the year. Demand for our Super Triple rigs continues to grow as customers recognize our fleet’s performance and efficiency and want to ensure their preferred rigs are available for 2023 capital budget deployments.

“In Canada, we averaged 59 active rigs during the third quarter, which represents a 16% increase over the same period last year. We currently have 73 active rigs, our highest activity level for 2022. During the quarter, we mobilized an additional Super Triple rig from Colorado to Alberta that will be working under a long-term contract for a customer with multiple Precision rigs drilling LNG Canada-related projects. We are currently sold out of our Super Triple rigs and expect our pad Super Single rig fleet to be fully utilized as recently upgraded rigs return to the field.

“Internationally, the drilling activity outlook is improving as well. We currently have six rigs active and expect this to increase to at least eight by the middle of 2023 following a recent successful tender process in Kuwait where Precision was awarded four five-year contracts, increasing our active rig count from three rigs to five. Combined with the three recent contract extensions in Saudi Arabia, Precision will have eight Middle East rigs under long-term contracts, representing approximately $820 million (US$600 million) of contracted revenue going forward that will stretch into 2028.

“We completed our well servicing acquisition in late July and integration efforts have exceeded expectations, as we aligned key operational processes and generated significant synergies. In the third quarter, our well servicing hours increased 62% from the prior year quarter, with only a two-month contribution from the acquired assets. The combined operations helped drive the highest quarterly Adjusted EBITDA for our Completion and Production Services segment since the fourth quarter of 2018. During the third quarter, we realized annual run-rate cost synergies of over $3 million and expect to substantially achieve our $5 million target by early next year. In addition, we fully expect to realize significant revenue synergies from the combined operations of the business.

"We remain focused on debt reduction and shareholder returns and are on track to meet our 2022 debt reduction goal of $75 million, while allocating 10% to 20% of free cash flow toward share repurchases. With no senior note maturities until 2026 and over $540 million of available liquidity, our balance sheet remains in excellent shape to support our business activities and allow for further deleveraging through cash flow over the coming quarters.

“We are proving our ability to differentiate Precision's Super Series rigs from our competitors with our Alpha™ digital technologies and EverGreen™ suite of environmental solutions. Over 90% of our 60 Alpha™ rigs are earning incremental revenue, which helped drive day rate and margin performance in the quarter. We expect these contributions to increase as customer demand is high for consistent, predictable, and optimized drilling and we continue to equip more of our Super Triple rig fleet with Alpha™. We plan to have a total of 70 Alpha™ Super Triple rigs by year end with the remaining rigs in our Super Triple fleet to be converted early in 2024, nearly one year ahead of our long-term plan.

“Our EverGreen™ suite of environmental solutions offers customers products and applications to measure and reduce their greenhouse gas (GHG) emissions during drilling operations. To date, we have successfully deployed five hybrid battery storage, natural gas and low emission power generating systems, which reduce emissions and fuel costs, helping our customers achieve their GHG reduction targets while improving well economics.

“Since mid 2020, Precision’s financial results have been gaining momentum and while we are mindful of a possible economic recession, we expect this momentum to continue as industry fundamentals provide a promising backdrop for our business. Low oil and natural gas inventories, elevated commodity prices and a tight rig market all support day rates and margins moving higher. I would like to thank our shareholders for their continued support and the team at Precision for their hard work and dedication,” concluded Mr. Neveu.

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

(1) See “FINANCIAL MEASURES AND RATIOS.”

Operating Highlights

Financial Position

(1) See “FINANCIAL MEASURES AND RATIOS.”

Summary for the three months ended September 30, 2022:

• Revenue for the quarter was $429 million, 69% higher than in 2021, due to increased North American drilling and service activity and day rates.
• Adjusted EBITDA for the quarter was $120 million, $74 million higher than 2021. Our Adjusted EBITDA for the quarter included $6 million of share-based compensation charges and approximately $4 million of non-recurring costs associated with the High Arctic transaction, severance costs, and mobilization of a drilling rig from the U.S. to Canada. Please refer to “Other Items” later in this news release for additional information on our share-based compensation charges.
• Adjusted EBITDA as a percentage of revenue (see “FINANCIAL MEASURES AND RATIOS”) was 28% as compared with 18% in 2021, demonstrating our ability to maximize our operating leverage in a growing activity environment.
• General and administrative expenses this quarter were $25 million, $1 million higher than in 2021 due to increased labor and personnel costs, non-recurring well servicing acquisition costs and lower CEWS program assistance, offset by lower share-based compensation charges.
• Net finance charges for the quarter were $23 million, an increase of $2 million from 2021 due to higher variable interest rates on our Senior Credit Facility and the impact of higher foreign exchange rates on our U.S. denominated long-term debt.
• In the U.S., revenue per utilization day was US$27,847 compared with US$20,331 in 2021, an increase of 37% and was primarily the result of higher contracted day rates, impact of Alpha™ and EverGreen™ revenue and improved operating cost recoveries. During the third quarter, we recognized revenue from idle but contracted rigs and turnkey projects of US$1 million and nil, respectively, as compared with nil in 2021. Revenue per utilization day in the quarter excluding the impact of idle but contracted rig revenue was US$27,682, compared to US$20,331 in the prior year, an increase of US$7,351. On a sequential basis, revenue per utilization day, excluding idle but contract rigs and turnkey revenue, increased approximately US$4,092.
• Our U.S. operating costs on a per day basis increased to US$18,220, compared with US$15,120 in 2021, due to increased rig operating expenses, repairs and maintenance and higher costs that pass through to our customers. Our U.S. operating costs included rig reactivations charges totaling US$2 million. Sequentially, excluding the impact of turnkey activity, our operating costs per day increased approximately US$1,522.
• In Canada, average revenue per utilization day for contract drilling for the quarter was $26,927 compared with $19,427 in 2021, an increase of 39% and was the result of higher day rates and increased labor and cost recoveries.
• Our Canadian operating costs on a per day basis increased to $16,893, compared with $13,189 in 2021 due to industry-wide wage increases, higher repairs and maintenance expense and lower CEWS program assistance. During the third quarter of 2021, we recognized $5 million of CEWS program assistance.
• Completion and Production Services third quarter revenue and Adjusted EBITDA was $57 million and $15 million, respectively, compared with $28 million and $5 million in 2021. Our improved results were supported by higher service rates and operating hours, the impact of the High Arctic asset acquisition, partially offset by lower CEWS program assistance as we recognized $1 million of assistance in 2021.
• We realized third quarter revenue from international contract drilling of US$28 million, largely consistent with 2021, as activity and day rates remained constant.
• Third quarter cash provided by operations was $8 million as compared with $22 million in 2021. Our lower cash generation during the quarter was primarily due to the timing of long-term debt interest payments resulting from our unsecured senior notes issuance in 2021. We generated $81 million of funds from operations as compared with $34 million in 2021. Our increased activity and day rates, operational leverage and lower share-based compensation charges, partially offset by the timing of long-term debt interest payments, contributed to our higher funds from operations for the quarter.
• Capital expenditures were $51 million as compared with $20 million in 2021. Capital spending by spend category (see “FINANCIAL MEASURES AND RATIOS”) included $25 million for expansion and upgrades and $26 million for the maintenance of existing assets and infrastructure.
• Generated $22 million of proceeds from the sale of non-core assets; including certain real estate and facilities located in Alberta and Texas and the receipt of insurance proceeds from our second quarter well control event.
• We ended the quarter with $40 million of cash and more than $540 million of available liquidity.
• We repurchased and cancelled 69,599 common shares for $5 million under our NCIB.
• We successfully integrated the well servicing business and associated rental assets acquired from High Arctic, adding 80 service rigs to our fleet along with related rental assets, ancillary support equipment, inventories, spares and six additional operating facilities in key operating basins.

Summary for the nine months ended September 30, 2022:

• Revenue for the first nine months of 2022 was $1,107 million, an increase of 60% from 2021.
• Adjusted EBITDA for the period was $221 million as compared with $129 million in 2021. Our higher Adjusted EBITDA was attributable to higher activity and day rates, partially offset by higher share-based compensation charges, the impact of the second quarter well control event and lower CEWS program assistance. Our 2021 Adjusted EBITDA was positively impacted by $24 million of CEWS program assistance.
• General and administrative costs were $102 million, an increase of $25 million from 2021 primarily due to increased personnel costs, higher share-based compensation charges and lower CEWS program assistance.
• Net finance charges were $64 million, a decrease of $6 million from 2021 due to lower debt issue costs. In 2021, we accelerated the amortization of issue costs associated with fully redeemed unsecured senior notes.
• Cash provided by operations was $78 million as compared with $80 million in 2021. Funds provided by operations in 2022 were $172 million, an increase of $82 million from the comparative period.
• Capital expenditures were $127 million in 2022, an increase of $79 million from 2021. Capital spending by spend category included $51 million for expansion and upgrades and $76 million for the maintenance of existing assets and infrastructure.
• Year-to-date, we have borrowed US$23 million on our Senior Credit Facility and repurchased and cancelled 130,395 common shares for $10 million under our NCIB.

STRATEGY

Precision’s strategic priorities for 2022 are as follows:

1. Grow revenue through scaling Alpha™ technologies and EverGreen™ suite of environmental solutions across Precision's Super Series rig fleet and further competitive differentiation through ESG initiatives – Utilization of our Alpha™ technologies continues to grow and generate incremental revenue. During the quarter, revenue from our Alpha™ technologies grew 56% compared with the third quarter of 2021 as our total paid days for AlphaAutomation™ increased by 56%, consistent with our year-to-date increase of 55%. We currently have 60 AC Super Triple rigs equipped with Alpha™ and over 90% are generating incremental revenue as customers see the value in our technology. Our plan is to have a total of 70 rigs converted by year end, and the entire fleet of Super Triple rigs converted by early 2024. We continue to scale our EverGreen™ suite of environmental solutions, which will further differentiate us from our competitors and drive additional revenue growth. As of October 26, 2022, we had five commercial, field-deployed, EverGreen™ Battery Energy Storage Systems with two additional systems scheduled for installation by year end. In addition, we had 13 EverGreen™ Integrated Power & Emissions Monitoring Systems deployed and anticipate ending the year with 15 systems installed.
2. Grow free cash flow by maximizing operating leverage as demand for our High Performance, High Value services continues to rebound – During the third quarter of 2022, we generated cash and funds from operations of $8 million and $81 million, respectively. Our third quarter active rig count was up 39% in the U.S. and 16% in Canada compared to the same period last year, while our daily operating margins (average revenue less operating costs per utilization day) also improved despite continued industry-wide inflationary pressure. With the tightening of available Super Series rigs, we expect to realize further pricing increases in the U.S. and Canada as expiring contracts are renewed or extended. On July 27, 2022, we acquired High Arctic’s well servicing business and associated rental assets, increasing our well servicing hours 62% from the prior year’s third quarter and driving the highest quarterly Adjusted EBITDA from our Completion and Production Services segment since the fourth quarter of 2018.
3. Utilize free cash flow to continue strengthening our balance sheet while investing in our people, equipment and returning capital to shareholders – We continue to target $75 million of long-term debt reduction for 2022 and our longer-term debt reduction goals of $400 million between 2022 and 2025 and Net Debt to Adjusted EBITDA (see “FINANCIAL MEASURES AND RATIOS”) of less than 1.5 times by 2025. During the quarter, our reinvestment into our drilling fleet included $51 million of capital expenditures and we generated $22 million of cash proceeds from the divestiture of non-core assets. In 2022, we have drawn approximately US$23 million on our Senior Credit Facility to fund our increased cash demands as our respective drilling and service activity increased 26% and 72% from the second quarter of 2022. Through share repurchases under our NCIB, we have returned $10 million of capital to shareholders this year.

OUTLOOK

The rebound of global energy demand and the impact of a multi-year period of underinvestment in upstream oil and natural gas has resulted in reduced inventories of oil and natural gas and higher commodity prices, providing a supportive outlook for the oilfield services industry. The war in Ukraine and sanctions on Russian hydrocarbons have exacerbated the challenged supply situation and many importing countries are looking toward North America and the Middle East to fill the supply gap from exports of crude oil and natural gas through the global Liquified Natural Gas (LNG) market. Constrained natural gas production levels and low natural gas storage volumes have resulted in North American natural gas prices strengthening in the last year. With U.S. LNG exports growing as countries look to displace Russian natural gas and various Canadian LNG projects to come online in 2025, we anticipate a sustained period of elevated natural gas drilling activity.

At current commodity price levels, we anticipate higher demand for our services and improved fleet utilization as customers seek to maintain production levels and replenish inventories, as drilled but uncompleted wells have been depleted over the past several years. However, broad economic concerns exist with respect to recession risk, rising interest rates and geopolitical instability. These concerns may negatively impact customer spending plans.

With North American industry activity expected to further increase into 2023, we anticipate near full utilization in the high specification rig market with customers seeking term contracts to secure rigs and ensure fulfilment of their development programs. Accordingly, the tightening of available high specification rigs is expected to drive higher day rates and necessitate customer funded rig upgrades.

Interest in our EverGreen™ suite of environmental solutions continues to gain momentum as customers seek meaningful solutions to achieve their emission reduction targets and improve their well economics. We expect our growing suite of Alpha™ technologies paired with our EverGreen™ suite of environmental solutions to be key competitive differentiators as our predictable and repeatable drilling results deliver exceptional value to our customers by reducing risks, well construction costs and carbon footprint.

The outlook for our Precision Well Servicing business remains positive with strong commodity prices supporting maintenance and completion activity. We successfully acquired and integrated the High Arctic well servicing assets and associated rental business early in the third quarter. By leveraging our existing platform and continuing our strict focus on cost control, we have realized annual run-rate cost synergies of over $3 million and expect to achieve the vast majority of our $5 million target by early next year. Additionally, support from both federal and provincial governments has increased well abandonment and rehabilitation projects.

In October, we announced the addition of Lori A. Lancaster to our Board of Directors. With over 25 years of experience as a strategic and financial advisor to the global natural resources sector and having served as a board member of publicly traded companies within the energy sector, we believe Ms. Lancaster's extensive knowledge and experience will enhance our existing Board of Directors.

Contracts

Year-to-date in 2022, we have entered into 61 term contracts and 23 new contracts since the end of the second quarter of 2022. The following chart outlines the average number of drilling rigs under contract by quarter as of October 26, 2022. For those quarters ending after September 30, 2022, 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.

The following chart outlines the average number of drilling rigs that we had under contract for 2021 and the average number of rigs we have under contract as of October 26, 2022.

(1) Does not include Kuwait contracts awarded subsequent to September 30, 2022.

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.

According to industry sources, as at October 26, 2022, the U.S. active land drilling rig count has increased 43% from the same point last year while the Canadian active land drilling rig count has increased by 28%. To date in 2022, approximately 79% of the U.S. industry’s active rigs and 63% of the Canadian industry’s active rigs were drilling for oil targets, compared with 80% for the U.S. and 54% for Canada at the same time last year.

Capital Spending and Free Cash Flow Allocation

We increased our capital spending plan to reflect higher maintenance capital from our increasing activity, strategic purchase of drill pipe and customer funded rig upgrades. Capital spending in 2022 is expected to be $165 million and by spend category includes $96 million for sustaining, infrastructure and intangibles and $69 million for expansion and upgrades. We expect the $165 million will be split $157 million in the Contract Drilling Services segment, $5 million in the Completion and Production Services segment and $3 million to the Corporate segment. At September 30, 2022, Precision had capital commitments of $163 million with payments expected through 2024.

Our debt reduction plans continue with the goal of repaying $75 million in 2022 and over $400 million of debt over the next four years and reaching a sustained Net Debt to Adjusted EBITDA ratio of below 1.5 times. At the end of 2025, we expect to have reduced debt by well over $1 billion since 2018. In addition to our debt reduction target through 2025, we plan to allocate 10% to 20% of free cash flow before debt principal repayments toward the return of capital to shareholders.

SEGMENTED FINANCIAL RESULTS

(1) See “FINANCIAL MEASURES AND RATIOS.”

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

(1) See “FINANCIAL MEASURES AND RATIOS.”

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

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

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

(1) See “FINANCIAL MEASURES AND RATIOS.”

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 of $14 million as compared with $15 million in the third quarter of 2021. Our Adjusted EBITDA was positively impacted by decreased share-based compensation costs, partially offset by lower CEWS program assistance.

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 2021 Annual Report.

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

Cash settled share-based compensation expense for the quarter was $6 million as compared with $12 million in 2021. The decreased expense in 2022 was primarily due to our lower sequential quarter share price. Our equity settled share-based compensation expense for the third quarter of 2022 was nil as our Executive PSUs and share options fully vested in the first quarter of 2022.

As at September 30, 2022, the majority of our share-based compensation plans were classified as cash-settled and will be impacted by changes in our share price. Although accounted for as cash-settled, Precision retains the ability to settle certain vested units in common shares at its discretion.

Finance Charges

Third quarter net finance charges were $23 million as compared with $21 million in 2021. The increased finance charges were primarily due to higher variable interest rates on our Senior and Real Estate Credit Facilities and the impact of higher foreign exchange rates on our U.S. denominated long-term debt. Interest charges on our U.S. denominated long-term debt in the third quarter were US$16 million ($20 million) as compared with US$15 million ($19 million) in 2021.

Income Tax

Income tax expense for the quarter was $6 million as compared with a $4 million recovery in 2021. The higher income tax expense for the quarter was the result of our positive earnings. During the third quarter, we did not recognize deferred tax assets on certain Canadian and international operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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

At September 30, 2022, we had $1,259 million outstanding under our Senior Credit Facility, Real Estate Credit Facilities and unsecured senior notes as compared with $1,126 million at December 31, 2021. The weakening of the Canadian dollar resulted in $106 million of additional stated debt at September 30, 2022.

The current blended cash interest cost of our debt is approximately 6.9%.

Covenants

At September 30, 2022, we were in compliance with the covenants of our Senior Credit Facility and Real Estate Credit Facilities.

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

Average shares outstanding

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

QUARTERLY FINANCIAL SUMMARY

(1) See “FINANCIAL MEASURES AND RATIOS.”

FINANCIAL MEASURES AND RATIOS

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 2022;
• our capital expenditures, free cash flow allocation and debt reduction plan for 2022;
• anticipated activity levels, demand for our drilling rigs, day rates and margins in 2022;
• the average number of term contracts in place for 2022;
• customer adoption of Alpha™ technologies and EverGreen™ suite of environmental solutions;
• anticipated timing and amount of costs savings from acquired well servicing and rental assets;
• potential commercial opportunities and rig contract renewals;
• our future debt reduction plans beyond 2022; and
• anticipated timing and amounts of insurance recoveries.

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

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

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

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

Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2021, which may be accessed on Precision’s SEDAR profile at www.sedar.com or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this release are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)