Mr. Kevin Neveu reports

PRECISION DRILLING REPORTS 2023 FOURTH QUARTER AND YEAR-END UNAUDITED FINANCIAL RESULTS

Precision Drilling Corp. has released strong 2023 fourth quarter results plus 2024 capital budget and shareholder return targets.

Highlights:

• Revenue and Adjusted EBITDA(1) were $507 million and $151 million, respectively, as compared with $511 million and $91 million in 2022.
• Net earnings were $147 million ($10.42 per share) as compared with $3 million ($0.27 per share) in 2022. Our 2023 results included the following non-recurring items:
• • transaction costs and severance of $6 million;
  • non-cash charge of $10 million from the decommissioning of 27 drilling rigs;
  • $26 million gain from our acquisition of CWC Energy Services Corp. (CWC); and
  • an income tax recovery of $69 million, as we recognized a deferred income tax asset of $73 million related to the expected future use of certain Canadian operating losses.
• Our fourth quarter Adjusted EBITDA of $151 million included share-based compensation of $13 million and $6 million of transaction costs and severance. In comparison, our 2022 Adjusted EBITDA of $91 million included $75 million of share-based compensation and nil transaction costs and severance.
• Grew fourth quarter revenue per utilization day 16 per cent in Canada to $34,616 and 10 per cent in the U.S. to US$34,452 as compared with 2022.
• Internationally, we activated an additional rig in the fourth quarter and have a total of eight active rigs working in the Middle East on term contracts. In 2024, we expect our average active international rig count to increase approximately 40 per cent as compared with 2023.
• Completion and Production Services generated fourth quarter revenue of $62 million and Adjusted EBITDA of $12 million, both comparable to the same period last year.
• We completed our acquisition of CWC and have realized approximately $12 million of our anticipated annualized synergies of $20 million.
• Our fourth quarter cash provided by operations of $170 million helped fund capital expenditures of $79 million, debt repayment of $87 million, which included the full repayment of CWC's $51 million syndicated loan, and share repurchases of $17 million.
• Continued to strengthen our financial position, ending the year with $54 million of cash, a Net Debt to Adjusted EBITDA ratio(1) of approximately 1.4 times, and more than $600 million of available liquidity.
• For the year ended December 31, 2023, we achieved our annual debt reduction and return of shareholder capital targets, reducing debt by $152 million and repurchasing $30 million of common shares.
• Based on our current free cash flow outlook, we expect to reduce debt by $150 million to $200 million in 2024 and allocate 25 per cent to 35 per cent of free cash flow before debt repayments toward share repurchases.
• Our 2024 capital budget is $195 million, which is lower than the $227 million invested in 2023.

Precision's President and CEO, Kevin Neveu, stated: "Precision continued to deliver strong results in the fourth quarter, generating revenue of $507 million, Adjusted EBITDA of $151 million and net earnings of $147 million. This concluded one of our most profitable years in the past decade and allowed us to exceed our cash flow expectations. During the year, we not only met our debt reduction and shareholder capital return targets but also funded two accretive acquisitions. Our High Performance, High Value strategy along with our Super Series rigs, Alpha technologies, and EverGreen suite of environmental solutions continue to differentiate our services.

"We are pleased with the broad market acceptance of our Alpha technologies with 75 per cent of our Super Triple drilling days during 2023 including AlphaAutomation and several AlphaApps. Our customers see the benefits of predictable and repeatable drilling performance and the inherent efficiencies this creates on pad drilling projects. Our EverGreen suite of environmental solutions including Battery Energy Storage Systems (BESS), grid power connections, diesel fuel emission and reduction systems, and low-emission location lighting solutions has also gained widespread adoption, with approximately 65 per cent of our Super Triple fleet employing one or more of these solutions. We believe both our Alpha and EverGreen product lines will continue to drive market share gains and deliver strong financial returns for Precision on these investments.

"Precision's Canadian drilling business in 2023 displayed high utilization, expanded profitability and deeper relationships with our customers. We completed several customer requested upgrades to our fleet and secured multiple term contracts throughout the year, averaging 23 in the fourth quarter, a 44 per cent increase over the fourth quarter of 2022. We currently have 80 rigs active, which exceeds our highest rig count in 2023. We expect demand to remain firm through the winter drilling season and ramp up after spring breakup as the Trans Mountain pipeline expansion becomes operational and Coastal GasLink begins to support LNG Canada start-up activities. This additional takeaway capacity is expected to continue to drive demand for our Super Triples and pad-capable Super Singles, which we expect to be in high demand for the balance of 2024 and beyond.

"In the U.S., industry drilling activity in 2023 was impacted by weak natural gas prices, oil price volatility, and merger and acquisition activity, resulting in a 21 per cent decline in the active rig count year over year. Since mid-2023 Precision's active rig count has remained steady near the low-40s. We continue to sign contracts with customers and based on recent conversations, we expect activity to begin to increase later in the second quarter.

"Internationally, we recertified and reactivated four Kuwait rigs in 2023 and now have eight active rigs working in the Kingdom of Saudi Arabia and Kuwait. With these additional rigs, we expect our activity to increase approximately 40 per cent year over year and provide predictable future cash flow as the majority of these rigs are under five-year term contracts that extend into 2027 and 2028. We continue to explore opportunities to deploy our remaining idle rigs in the region.

"Precision's Completion and Production Services segment generated $51 million of Adjusted EBITDA during the year, representing a 34 per cent increase over the prior year, driven by an 18 per cent increase in activity from Precision well servicing. With strong Canadian fundamentals, the timely acquisition of CWC in late-2023 is proving to be highly successful. We have fully integrated operations and have realized approximately $12 million of the expected $20 million in annual synergies. With the acquisitions of CWC in 2023 and High Arctic's well servicing assets in 2022, Precision has solidified its position as the premier well service provider in Canada and transformed this portion of our business into a meaningful contributor to Precision's free cash flow.

"I am proud of our accomplishments in 2023. We successfully delivered on our three strategic priorities: generated significant free cash flow; strengthened our financial position by reducing our debt by $152 million; and increased direct returns to shareholders by allocating 15 per cent of our free cash flow to share repurchases. In 2024, we plan to increase our direct shareholder capital return program by allocating 25 per cent to 35 per cent of our free cash flow, before debt repayments, to share repurchases. Our focus on our debt reduction strategy remains firmly in place and in 2024, we plan to reduce debt by another $150 million to $200 million. This positions us to achieve our sustained Net Debt to Adjusted EBITDA ratio target of below 1.0 times by the end of 2025 and meet our long-term debt reduction target of $500 million between 2022 and 2025. As of December 31, 2023, we have repaid $258 million of this $500 million target.

"Looking ahead, we expect sustained free cash flow to be a feature of the business and will continue to assess the best route to drive shareholder returns. We currently believe this will be a function of increasing direct capital returns to shareholders while continuing to strengthen the balance sheet. As a result, we plan to reduce debt another $100 million by the end of 2026 and continue to move our direct shareholder capital returns towards 50 per cent of free cash flow.

"I would like to thank our employees for their dedication and our shareholders for their support. With constructive long-term fundamentals for energy, combined with our High Performance, High Value strategy, I am confident we will continue to drive shareholder value," concluded Mr. Neveu.

Summary for the three months ended December 31, 2023:

Revenue of $507 million was largely consistent with 2022 as the strengthening of North America revenue rates and increased well service and international activity were offset by lower North America drilling activity. Drilling rig utilization days decreased 25 per cent and 3 per cent in the U.S. and Canada, respectively. International activity increased 26 per cent as we reactivated rigs in the Middle East. Our service rig operating hours increased 15 per cent as compared with 2022.

Adjusted EBITDA was $151 million as compared with $91 million in 2022. Our higher 2023 Adjusted EBITDA was primarily the result of lower share-based compensation, partially offset by $6 million in transaction costs and severance. Share-based compensation was $13 million as compared with $75 million in 2022. Please refer to "Other Items" later in this news release for additional information on share-based compensation.

Adjusted EBITDA as a percentage of revenue was 30 per cent as compared with 18 per cent in 2022.

Our U.S. revenue per utilization day was US$34,452 compared with US$31,242 in 2022. The increase was primarily the result of higher fleet average day rates, idle but contracted rig revenue and cost recoveries, partially offset by lower turnkey revenue. We recognized revenue from idle but contracted rigs and turnkey activity of US$7 million and nil, respectively, as compared with nil and US$4 million in 2022. Revenue per utilization day, excluding the impact of idle but contracted rigs and turnkey activity was US$32,189, compared to US$30,504 in 2022, an increase of US$1,685 or 6 per cent. Revenue per utilization day, excluding idle but contracted rigs and turnkey activity, decreased US$1,354 from the third quarter of 2023.

Our U.S. operating costs per utilization day increased to US$21,039 compared with US$19,253 in 2022. The increase was primarily due to higher rig operating costs, repairs and maintenance, recoverable costs and the impact of fixed costs being spread over fewer activity days. U.S. operating costs per utilization day, excluding turnkey, was US$21,015 compared with US$18,655 in 2022. Sequentially, excluding the impact of turnkey activity, operating costs per utilization day decreased US$587. The decrease was primarily due to lower repairs and maintenance, partially offset by the impact of fixed costs being spread over fewer activity days.

In Canada, revenue per utilization day was $34,616 compared with $29,886 in 2022. The increase was a result of higher average day rates and cost recoveries. Sequentially, revenue per utilization day increased $2,392 due to higher boiler revenue.

Our Canadian operating costs per utilization day increased to $19,191, compared with $17,538 in 2022, due to higher field wages and recoverable costs, partially offset by lower repairs and maintenance. Sequentially, our daily operating costs increased $880 due to higher field wages and recoverable costs, partially offset by fixed costs being spread over a higher activity base.

Completion and Production Services revenue and Adjusted EBITDA were $62 million and $12 million, respectively, compared with $59 million and $12 million in 2022.

We realized US$35 million of international contract drilling revenue compared with US$28 million in 2022. Our increased revenue was the result of higher activity as we reactivated rigs in the Middle East.

General and administrative expenses were $39 million as compared with $79 million in 2022. The decrease was primarily due to lower share-based compensation, partially offset by $4 million in transaction costs and severance.

We recognized non-recurring transaction costs and severance of $6 million which were presented as increases to operating and general and administrative costs of $2 million and $4 million, respectively.

Net finance charges were $19 million, a decrease of $4 million compared with 2022 and was the result of lower outstanding long-term debt.

We decommissioned 20 legacy drilling rigs from our Canadian fleet and seven from our U.S. fleet, recognizing a non-cash loss on asset decommissioning of $10 million.

Cash provided by operations was $170 million compared with $159 million in 2022. We generated $145 million of funds provided by operations compared with $111 million in 2022. Our increased day rates, revenue efficiency and operational leverage continued to drive higher cash generation in 2023.

Capital expenditures were $79 million compared with $57 million in 2022. Capital spending by spend category(1) included $24 million for expansion and upgrades and $54 million for the maintenance of existing assets, infrastructure, and intangible assets.

We reduced debt by $25 million, primarily from the redemption of US$26 million of 2026 unsecured senior notes, offset by the assumption of the $10 million CWC Real Estate Credit Facility, and ended the quarter with $54 million of cash and more than $600 million of available liquidity.

Summary for the twelve months ended December 31, 2023:

• Revenue for the twelve months of 2023 was $1,938 million, an increase of 20 per cent from 2022.
• Adjusted EBITDA was $611 million as compared with $312 million in 2022. Our higher Adjusted EBITDA was attributable to increased North America drilling and service revenue rates, higher Canadian drilling and service activity and lower share-based compensation, partially offset by lower U.S. and international drilling activity.
• General and administrative costs were $122 million, a decrease of $59 million from 2022 primarily due to lower share-based compensation, partially offset by non-recurring transaction costs and severance of $4 million, higher labour-related costs and the impact of the weakening Canadian dollar on our translated U.S. dollar-denominated costs.
• Net finance charges were $83 million as compared with $88 million in 2022. Our decreased net finance charges in 2023 were the result of our lower debt balance, partially offset by the impact of higher variable interest rates and higher translated U.S. dollar-denominated interest charges due to the weakening of the Canadian dollar.
• Cash provided by operations was $501 million as compared with $237 million in 2022. Funds provided by operations in 2023 were $533 million, an increase of $250 million from the comparative period. Our higher cash generation in 2023 was attributable to our increased revenue efficiency, higher Canadian drilling and service activity and lower share-based compensation, partially offset by lower U.S. and international drilling activity.
• Capital expenditures were $227 million in 2023, an increase of $42 million from 2022. Capital spending by spend category included $64 million for expansion and upgrades and $163 million for the maintenance of existing assets, infrastructure, and intangible assets. Capital expenditures were $12 million higher than guidance due to the timing of equipment deliveries.
• Our investment activities for the year included the deferred payment of $28 million from our 2022 acquisition of High Arctic Energy Services Inc. (High Arctic), $14 million of cash consideration for the CWC acquisition, a $5 million investment in CleanDesign Income Corp. and proceeds of $10 million from the sale of Cathedral Energy Services Ltd. shares.
• Year to date, we have reduced debt by $152 million from the full repayment of our Senior Credit Facility and US$74 million of repurchases and redemptions of our 2026 unsecured senior notes, partially offset by the assumption of the $10 million CWC Real Estate Credit Facility. In addition, we repurchased and cancelled 412,623 common shares for $30 million under our Normal Course Issuer Bid (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.

Below we summarize the results of our 2023 strategic priorities:

• Deliver High Performance, High Value service through operational excellence.
• Increased our Canadian drilling rig utilization days and well servicing rig operating hours over 2022, maintaining our position as the leading provider of high-quality and reliable services in Canada.
• Recertified and reactivated a total of four rigs in the Middle East, exiting 2023 with eight active rigs that represent approximately US$475 million in backlog revenue that stretches into 2028.
• Acquired CWC in November, expanding our Canadian well servicing business and North America drilling rig fleet.
• Reinvested $227 million into our equipment and infrastructure. This included a significant upgrade to add the industry's most advanced AC Super Triple rig to our Canadian fleet, equipped with Alpha automation, EverGreen products, and rig floor robotics.
• Coached over 900 rig-based employees through our New Employee Orientation focused on industry-leading safety and performance training at our world-class facilities in Nisku, Alberta and Houston, Texas.
• Maximize free cash flow by increasing Adjusted EBITDA margins, revenue efficiency, and growing revenue from Alpha technologies and EverGreen suite of environmental solutions.
• Generated cash from operations of $501 million, a 111 per cent increase over 2022.
• Increased our daily operating margins(1) 32 per cent in Canada and 69 per cent in the U.S. year over year.
• Grew combined Alpha and EverGreen revenue by over 10 per cent compared with 2022.
• Ended the year with 75 AC Super Triple Alpha rigs compared to 70 at the beginning of the year.
• Scaled our EverGreen suite of environmental solutions, ending the year with approximately 65 per cent of our AC Super Triple rigs equipped with at least one EverGreen product, including 13 EverGreen BESS versus seven a year ago.
• Integrated the well servicing assets from our 2022 acquisition of High Arctic, which helped increase our annual Completion and Production Services' Adjusted EBITDA 34 per cent in 2023.
• 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 (2) of below 1.0 times by the end of 2025.
• Reduced debt by $152 million and ended the year with more than $600 million of available liquidity.
• Returned $30 million of capital to shareholders through share repurchases and renewed our NCIB, allowing us to purchase up to approximately 10 per cent of our public float.
• Ended the year with a Net Debt to Adjusted EBITDA ratio(1) of approximately 1.4 times and remain committed to reaching a sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times by the end of 2025.

2024 Strategic Priorities

Precision's strategic priorities for 2024 are focused on increasing our capital returns to shareholders by delivering best-in-class service and generating free cash flow. Precision's strategic priorities for 2024 are as follows:

• Concentrate organizational efforts on leveraging our scale and generating free cash flow.
• Reduce debt by $150 million to $200 million and allocate 25 per cent to 35 per cent of free cash flow before debt repayments to share repurchases, while remaining committed to achieving a sustained Net Debt to Adjusted EBITDA ratio of below 1.0 times by the end of 2025. Increase long-term debt reduction target to $600 million between 2022 and 2026 and continue to move direct shareholder capital returns towards 50 per cent of free cash flow.
• Continue to deliver operational excellence in drilling and service rig operations to strengthen our competitive position and extend market penetration of our Alphaand EverGreenproducts.

OUTLOOK

Energy industry fundamentals continue to support drilling activity for oil and natural gas despite economic uncertainty and the continued presence of global conflict. Today, oil prices are supported by increasing global demand and limited supply growth as OPEC continues to honor its lower production quotas and producers remain committed to returning capital to shareholders versus increasing production. Current depressed global inventories, potential refilling of the U.S. Strategic Petroleum Reserve, and fewer high quality drilling locations all provide cautious optimism for price improvements.

Natural gas has demonstrated price weaknesses since early 2023; however, this lower-carbon energy source is becoming increasingly favored as countries around the world stress the importance of sustainability, decarbonization and energy security. Even with the recent U.S. moratorium on new U.S. Liquefied Natural Gas (LNG) export terminals, we still expect North American LNG export capacity (including LNG Canada) to increase by more than 14 bcf/d over the next three years due to projects that are currently under construction. We therefore anticipate a sustained period of elevated natural gas drilling activity in both the U.S. and Canada.

In Canada, Precision's drilling activity remained strong throughout 2023 and we expect high activity levels to continue into 2024 due to strong oil prices, tight supply of Super-Spec drilling rigs and increases in hydrocarbon export capacity. The Trans Mountain oil pipeline expansion is expected to be commissioned late in the first half of 2024, increasing Canada's tidewater takeaway capacity for crude oil by approximately 590,000 barrels per day. The Coastal GasLink pipeline achieved mechanical completion in late 2023 and will deliver gas to LNG Canada, which is expected to begin start-up activities in 2024.

Northwestern Alberta and Northeastern British Columbia natural gas developments are prime beneficiaries of LNG Canada. The January 2023 agreement between the Government of British Columbia and the Blueberry River First Nation facilitated a significant increase in drilling license approvals and should lead to more drilling activity in the region. Large pad drilling programs are ideally suited for our Super Triple rigs, resulting in strong customer interest for these rigs over the next several years. We expect our Super Triple fleet to be in high demand in 2024 and beyond, supporting higher day rates and daily operating margins, and longer-term take-or-pay contracts. In January 2024, we added the industry's most advanced Super Triple to our Canadian fleet on a three-year term contract, bringing our Canadian Super Triple fleet size to 30.

In the Canadian heavy oil market, we expect activity levels to remain strong as Canadian producers are benefiting from favorable oil pricing due to a weaker Canadian dollar exchange rate and improving heavy oil differentials. Precision's Super Single rigs are well suited for long-term conventional heavy oil development in the oil sands and Clearwater formation. We expect our Super Single pad-capable rigs to remain fully utilized throughout the year, supporting higher day rates.

In the U.S., drilling activity began to weaken in early 2023 due to lower natural gas prices and oil price volatility and was exacerbated by drilling and completion efficiencies, consolidation among producers, and continued capital discipline. As a result in 2023, the fourth quarter U.S. active land rig count declined by approximately 20 per cent as compared with 2022. If oil prices remain stable and around today's level, we expect demand to begin to improve in the second quarter and gain momentum through the remainder of 2024 as customers embark on a new budget cycle, seek to maintain or possibly increase production levels, and replenish inventories.

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. Currently, approximately 65 per cent of our Super Triple rigs have at least one EverGreen product, including 13 EverGreen BESS. These battery systems have proven to be an economically viable emissions reduction solution for our customers, and we anticipate continued demand for additional deployments in 2024.

Internationally, we activated our eighth rig in November and now have five active rigs in Kuwait and three active rigs in the Kingdom of Saudi Arabia and expect to increase activity approximately 40 per cent year over year. The majority of these rigs are on five-year term contracts that stretch into 2027 and 2028, providing Precision with predictable cash flow for the next several years. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure rig reactivations.

Precision is the leading provider of high-quality and reliable well services in Canada and the outlook for this business is positive. High customer demand for well maintenance and completion services is expected to add tightness to the availability of staffed service rigs, supporting healthy activity and pricing into the foreseeable future. In November, Precision closed the acquisition of CWC, which enhances our Canadian well servicing offering with high-quality rigs in complementary geographic regions. The acquisition is expected to increase activity approximately 40 per cent in 2024 and provide accretive cash flow on a per share basis.

Commodity Prices

Fourth quarter average West Texas Intermediate and Western Canadian Select oil prices decreased 5 per cent and 14 per cent, respectively, from 2022. Average Henry Hub and AECO natural gas prices declined 52 per cent and 56 per cent, respectively from 2022.

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at February 5, 2024. For those quarters ending after December 31, 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 2023 and the average number of rigs we have under term contract as at February 5, 2024.

In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. Accordingly, our anticipated Canadian rigs under term contract may fluctuate as customers complete their commitments earlier than projected. 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 February 5, 2024, the U.S. active land drilling rig count has decreased 19 per cent from the same point last year while the Canadian active land drilling rig count has decreased 7 per cent. To date in 2024, approximately 80 per cent of the U.S. industry's active rigs and 60 per cent of the Canadian industry's active rigs were drilling for oil targets, compared with 79 per cent for the U.S. and 63 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. In 2024, capital spending is expected to be $195 million. By spend category, we expect to incur $155 million for sustaining, infrastructure and intangibles, including approximately $45 million of long-lead items, and $40 million for expansion and upgrades. We expect that the $195 million will be split as follows: $177 million in the Contract Drilling Services segment, $13 million in the Completion and Production Services segment, and $5 million in the Corporate segment.

As at December 31, 2023, we had capital commitments of approximately $175 million with payments expected through 2026.

(financial results table)

2023 FOURTH QUARTER AND YEAR-END 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 Tuesday, February 6, 2024.

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/BIbb9becf4f3494c3fa2f6293fa7e871e7

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/x5wzqtp3

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. Our drilling services are enhanced by our EverGreen suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. 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.