Mr. Kevin Neveu reports

PRECISION DRILLING ANNOUNCES 2023 SECOND QUARTER UNAUDITED FINANCIAL RESULTS

Precision Drilling Corp. has released its 2023 second quarter financial results:

• Revenue was $426-million, compared with $326-million in the second quarter of 2022 as the company's drilling rigs continued to reprice at higher day rates, increasing 25 per cent in Canada and 39 per cent in the United States year over year;
• Achieved second quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $142-million, significantly surpassing the $64-million reported in 2022; adjusted EBITDA included idle but contracted rig revenue of $5-million (U.S.) and share-based compensation of $3-million, compared with $1-million (U.S.) and $5-million, respectively, in 2022;
• Net earnings were $27-million, or $1.97 per share, compared with a net loss of $25-million of $1.81 per share in 2022;
• Precision continued to deliver high performance, high-value service, expanding daily operating margins, maintaining strict cost control and scaling its Alpha digital technologies and EverGreen suite of environmental solutions across the company's Super Triple rig fleet, growing revenue from these offerings by over 60 per cent from the second quarter of 2022;
• Revenue per utilization day increased to $33,535 in Canada and $35,576 (U.S.) in the United States, while daily operating margins were $12,203 in Canada and $16,613 (U.S.) in the United States;
• Precision strengthened its contract book, signing take-or-pay term contracts with several new customers, including large U.S. independents and major oil and gas companies and increasing fourth quarter rigs under take-or-pay term contracts in the United States from 18 to 27 and in Canada from 15 to 25;
• Averaged 42 active rigs in Canada, an increase of 12 per cent over the second quarter of 2022, and 51 rigs in the United States, representing an 8-per-cent decline from the second quarter of 2022;
• Generated $213-million of cash from operations, repaid $178-million of debt, including all amounts drawn on the company's senior credit facility, and repurchased $30-million (U.S.) of 2026 unsecured senior notes; additionally, Precision returned $8-million to shareholders through share repurchases under the company's normal course issuer bid (NCIB);
• As at June 30, 2023, Precision has reduced total debt by $100-million since the beginning of the year and remains on track to meet the company's 2023 debt reduction target of at least $150-million; Precision remains committed to achieving a normalized net debt to adjusted EBITDA ratio of less than 1.0 times by the end of 2025;
• Ended the quarter with $23-million of cash and more than $575-million of available liquidity;
• Completion and production services generated revenue of $46-million and adjusted EBITDA of $8-million, representing increases of 40 per cent and 55 per cent, respectively, from the second quarter of 2022;
• Internationally, Precision has six rigs currently active in the Middle East, increasing to eight in the third quarter; these eight contracts are expected to generate stable predictable cash flow that will stretch into 2028.

Precision's president and chief executive officer, Kevin Neveu, stated: "We are pleased with our second quarter financial results, with revenue and adjusted EBITDA of $426-million and $142-million, respectively, and generating $1.97 of net earnings on a per share basis. As a result of Precision's strong operating cash flows combined with focused spending controls and efficient cash management, we delivered outstanding funds from operations. We have reduced our total debt by $100-million since the beginning of the year and are well on our way to achieving our 2023 debt reduction target while continuing to allocate capital to shareholders through share repurchases.

"Our Canadian business continues to improve with healthy spring break-up activity due to increasing year-round pad drilling in the Montney and Clearwater formations. With imminent additions to hydrocarbon pipeline takeaway capacity, the outlook is certainly encouraging. Our Canadian fleet is in high demand with 58 rigs running, including all of our Super Triples and pad capable Super Singles. We expect customer demand for our Super Triple and Super Single pad capable fleets will continue to exceed supply well into 2024.

"In the U.S. we currently have 43 active rigs and two rigs on paid standby. Firm oil prices are supporting an improved customer outlook as demand for our Super Triple rigs is increasing and demonstrated by securing contracts for several rig reactivations later this quarter and into 2024. We believe long-term natural gas fundamentals are robust, despite short-term uncertainty experienced this year, as several Gulf Coast LNG export trains are due to come on stream in late 2024 and 2025.

"In the Middle East, we currently have six rigs running and expect to have eight rigs active before the end of the third quarter. With two new rig activations this year, our international operations are expected to provide incremental, stable, and predictable cash flow in 2024.

"Our High Performance, High Value services and our Super Series fleet, coupled with our Alpha digital technologies and EverGreen suite of environmental solutions, continue to underpin Precision's earnings power. While our industry is susceptible to commodity price volatility, short-term industry cyclicality does not distract us from our business model or annual priorities. This includes our cash flow and debt reduction targets, which we have consistently met or exceeded, independent of the business cycle, and will continue to do so.

"I am confident that by remaining focused on our strategic priorities and what we can control, Precision will deliver increased shareholder value," concluded Mr. Neveu.

Summary for the three months ended June 30, 2023:

• Revenue of $426-million was 31 per cent higher than 2022 due to the further strengthening of North American drilling and service revenue rates, partially offset by lower U.S. and international activity. Drilling rig utilization days increased 12 per cent in Canada, while U.S. and international activity decreased by 8 per cent and 17 per cent, respectively. Our service rig operating hours increased 31 per cent to 39,709 hours as compared with 2022.
• Adjusted EBITDA was $142-million, $78-million higher than 2022 due to increased North America revenue rates, continued strict cost control and lower share-based compensation. Share-based compensation was $3-million as compared with $5-million in 2022. Please refer to "Other Items" later in this news release for additional information on share-based compensation charges.
• Adjusted EBITDA as a percentage of revenue was 33 per cent as compared with 20 per cent in 2022.
• Our U.S. revenue per utilization day was US$35,576 compared with US$25,547 in 2022. The increase was primarily the result of higher fleet average day rates and higher idle but contracted rig revenue, offset by lower turnkey activity. We recognized revenue from idle but contracted rigs and turnkey projects of US$5-million and nil, respectively as compared with US$1-million and US$9-million in 2022. Revenue per utilization day, excluding the impact of idle but contracted rigs and turnkey projects was US$34,396, compared to US$23,590 in 2022, an increase of US$10,806 or 46 per cent. Revenue per utilization day, excluding idle but contracted rigs and turnkey revenue, increased US$796 from the first quarter of 2023.
• Our U.S. operating costs per utilization day increased slightly to US$18,963 compared with US$18,864 in 2022. The increase was primarily due to higher rig operating costs offset by lower turnkey costs. Operating costs per utilization day, excluding turnkey activity, were US$18,941 compared with US$16,517 in 2022. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day decreased US$458.
• In Canada, revenue per utilization day was $33,535 compared with $26,746 in 2022. The increase was a result of higher average day rates and customer cost recoveries. Sequentially, revenue per utilization day increased $1,231 due to rig mix.
• Our Canadian operating costs per utilization day increased to $21,332, compared with $19,010 in 2022, due to higher field wages and costs that were recovered from our customers. Sequentially, our daily operating costs increased $2,586 due to higher repairs and maintenance costs spread over fewer activity days and rig mix.
• Completion and Production Services revenue and Adjusted EBITDA were $46-million and $8-million, respectively, compared with $33-million and $5-million in 2022.
• We realized US$23-million of international contract drilling revenue compared with US$30-million in 2022.
• General and administrative expenses were $23-million as compared with $21-million in 2022. The increase was primarily due to higher labour-related costs and the impact of the weakening Canadian dollar on our translated U.S. dollar-denominated costs.
• Net finance charges were $21-million, consistent with 2022.
• Cash provided by operations was $213-million compared with $135-million in 2022. We generated $137-million of funds provided by operations compared with $60-million in 2022. Our increased day rates, revenue efficiency and operational leverage contributed to higher cash generation in the current quarter.
• Capital expenditures were $45-million compared with $39-million in 2022. Capital spending by spend category (see "FINANCIAL MEASURES AND RATIOS") included $10-million for expansion and upgrades and $35-million for the maintenance of existing assets, infrastructure, and intangible assets.
• Repaid $178-million of debt, including all amounts drawn on our Senior Credit Facility and repurchased US$30-million of 2026 unsecured senior notes. Additionally, we returned $8-million to shareholders through share repurchases under our NCIB.
• We ended the quarter with $23-million of cash and more than $575-million of available liquidity.
• Subsequent to June 30, 2023, we completed our $5-million equity investment in CleanDesign Income Corp. (CleanDesign). CleanDesign is a key supplier of Precision's EverGreen Battery Energy Storage Systems (BESS) and this investment provides access to key BESS and power management technologies.

Summary for the six months ended June 30, 2023:

• Revenue for the first six months of 2023 was $984-million, an increase of 45 per cent from 2022.
• Adjusted EBITDA for the period was $345-million as compared with $101-million in 2022. Our higher Adjusted EBITDA was attributable to increased North American drilling and service activity, strengthening of day rates and lower share-based compensation charges.
• General and administrative costs were $39-million, a decrease of $38-million from 2022 primarily due to lower share-based compensation charges, partially offset by higher labour related costs and the impact of the weakening Canadian dollar on our translated U.S. dollar-denominated costs.
• Net finance charges were $44-million, an increase of $3-million from 2022 due to the impact of the weakening of the Canadian dollar on our U.S. dollar-denominated interest expense.
• Cash provided by operations was $242-million as compared with $70-million in 2022. Funds provided by operations in 2023 were $297-million, an increase of $206-million from the comparative period.
• Capital expenditures were $96-million in 2023, an increase of $20-million from 2022. Capital spending by spend category included $26-million for expansion and upgrades and $70-million for the maintenance of existing assets, infrastructure, and intangible assets.
• Year-to-date, we have reduced our total debt by $100-million through the full repayment of our Senior Credit Facility and the repurchase of US$30-million of our 2026 unsecured senior notes. In addition, we repurchased and canceled 193,616 common shares for $13-million under our NCIB.

STRATEGY

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

Precision's 2023 strategic priorities and the progress made during the second quarter are as follows:

1. Deliver High Performance, High Value service through operational excellence.
   • Grew our average active rig count by 12 per cent in Canada as compared with the same period last year.
   • Increased service rig operating hours 31 per cent over the second quarter of 2022. With the successful integration of High Arctic Inc.'s well servicing business, Precision is now the leading provider of high-quality and reliable services in Canada.
   • Reinvested $45-million into our equipment and infrastructure, bringing our year-to-date investment to $96-million as we progress toward our total expected 2023 investment of $195-million.
2. Maximize free cash flow by increasing Adjusted EBITDA margins, revenue efficiency, and growing revenue from Alpha technologies and EverGreen suite of environmental solutions.
   • Realized second quarter daily operating margins of $12,203 in Canada and US$16,613 in the United States, representing increases of 58 per cent and 149 per cent, respectively, compared with 2022.
   • Grew combined Alpha technologies and EverGreen suite of environmental solutions second quarter revenue by over 60 per cent compared with 2022.
   • Ended the quarter with 73 of our AC Super Triple rigs equipped with Alpha technologies, representing a 38 per cent increase over the same quarter last year.
   • Continued to scale our EverGreen suite of environmental solutions, adding one EverGreen BESS, two EverGreen Integrated Power and Emissions Monitoring Systems and 14 high mast LED lighting systems to our fleet during the quarter.
3. Reduce debt by at least $150-million and allocate 10 per cent to 20 per cent of free cash flow before debt repayments for share repurchases. Long-term debt reduction target of $500-million between 2022 and 2025 and sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times by the end of 2025.
   • Generated significant second quarter cash from operations of $213-million which allowed us to reduce debt by $178-million during the quarter, including the full repayment of our Senior Credit Facility and the repurchase of US$30-million of 2026 unsecured senior notes.
   • Returned $8-million of capital to shareholders by repurchasing and cancelling 126,543 common shares. For the first six months of the year, we have allocated $13-million of free cash flow to share repurchases.
   • For the first six months of the year, we have reduced total debt by $100-million. We remain committed to reducing debt by at least $150-million in 2023 and expect to reach a Net Debt to Adjusted EBITDA ratio of between 1.25 and 1.50 times by year end.

OUTLOOK

Energy industry fundamentals continue to support drilling activity for oil and natural gas despite broad economic concerns and geopolitical instability. Oil prices are supported by demand growth reemerging in China, while OPEC cutting production quotas and years of under investment and capital discipline by producers have limited supply growth. We therefore expect drilling activity to improve in the second half of the year as customers seek to generate appropriate investment returns, maintain production levels and replenish inventories. Natural gas has demonstrated short-term price weaknesses, however, this lower-carbon energy source is becoming increasingly favorable as countries around the world stress the importance of sustainability, decarbonization and energy security. With demand for Liquified Natural Gas (LNG) exports growing and the next wave of North America LNG projects expected to begin coming online in 2025 (including LNG Canada), we anticipate a sustained period of elevated natural gas drilling activity in both the U.S. and Canada.

In Canada, Precision's activity is expected to continue to surpass 2022 levels, supported by imminent hydrocarbon export capacity increases with the Trans Mountain oil pipeline and the Coastal GasLink pipeline, each expected to begin operations in early 2024. Northwestern Alberta and northeastern British Columbia natural gas developments are prime beneficiaries of the LNG Canada project and the January 2023 agreement between the British Columbia government and the Blueberry River First Nation has facilitated a significant increase in 2023 drilling license approvals, which should lead to more drilling activity in the region. Large pad drilling programs are ideally suited for Super Triple drilling rigs, resulting in strong customer interest for these rigs for the next several years. Our Super Triple fleet is currently fully utilized and we expect customer demand to continue to exceed supply, driving higher daily operating margins and longer-term take-or-pay contracts.

On the heavy oil side, we expect activity levels to remain strong as Canadian producers are benefitting from a favorable U.S. exchange rate and a significantly reduced heavy oil differential. Precision's Super Single rigs are well suited for long-term conventional heavy oil development in the oil sands and Clearwater formation. Looking at the second half of the year, we expect our Super Single pad capable rigs to be fully utilized, driving higher day rates.

In the U.S., drilling activity had been increasing since mid-2020 but began to weaken in early 2023 due to lower natural gas prices and uncertain oil prices. For the first six months of the year, the Baker Hughes' U.S. land rig count declined 14 per cent. If oil prices remain stable around today's level, we expect demand to improve in the second half of the year as customers modestly increase rig counts to maintain production. Over the past few months, we have signed a number of contracts for rig reactivations later this year and into 2024.

Our Alpha technologies and EverGreen suite of environmental solutions continue to gain momentum and have become key competitive differentiators for our rigs as these offerings deliver exceptional value to our customers by reducing risks, well construction costs and carbon footprint. We currently have 10 EverGreen BESS deployed in the field and have commitments for three additional deployments in the second half of the year. Precision's EverGreen BESS has proven to be an economically viable emissions reduction solution for our customers and we anticipate continued demand for additional deployments through the remainder of the year. In April, we expanded our partnership with CleanDesign, a key supplier of EverGreen BESS, through a $5-million equity investment commitment. This partnership will ensure we can meet the expected demand for BESS and is aligned with our overall emissions reduction strategy.

Internationally, we currently have six rigs working on term contracts, three in Kuwait and three in the Kingdom of Saudi Arabia, increasing to eight before the end of the third quarter. These eight rig contracts provide stable and predictable cash flow and represent over $700-million in backlog revenue that stretches into 2028. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure rig reactivations.

With the successful acquisition of High Arctic's well servicing business in July 2022, Precision is now the leading provider of high-quality and reliable well services in Canada and the outlook for this business is positive. Customer demand for maintenance and completion activity is expected to exceed staffed service rigs available, supporting healthy activity and strong pricing into the foreseeable future.

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at July 26, 2023. For those quarters ending after June 30, 2023, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts.

The following chart outlines the average number of drilling rigs that we had under term contract for 2022 and the average number of rigs we have under term contract as at July 26, 2023.

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 United States and internationally, term contracts normally generate 365 utilization days per year. Internationally, we expect to have eight rigs under long-term contract beginning in the second half of 2023.

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 July 26, 2023, the U.S. active land drilling rig count has decreased 12 per cent from the same point last year while the Canadian active land drilling rig count has increased 4 per cent. To date in 2023, approximately 79 per cent of the U.S. industry's active rigs and 59 per cent of the Canadian industry's active rigs were drilling for oil targets, compared with 79 per cent for the U.S. and 60 per cent for Canada at the same time last year.

Capital Spending and Free Cash Flow Allocation

We remain committed to disciplined cash flow management, capital spending and returning capital to shareholders. Capital spending in 2023 is expected to be $195-million and by spend category includes $145-million for sustaining, infrastructure and intangibles and $50-million for expansion and upgrades. We expect that the $195-million will be split as follows: $181-million in the Contract Drilling Services segment, $11-million in the Completion and Production Services segment, and $3-million in the Corporate segment. Capital spending could increase this year with stronger demand for our services and customer contracted rig upgrades. As at June 30, 2023, Precision had capital commitments of approximately $201-million with payments expected through 2025.

2023 SECOND QUARTER RESULTS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 12:00 noon MT (2:00 p.m. ET) on Thursday, July 27, 2023.

To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions. https://register.vevent.com/register/BIf5c55d0560124b6695127e367e6c4f90

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision's website for 12 months. https://edge.media-server.com/mmc/p/gpgem9pa

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."

We seek Safe Harbor.