Precision Drilling Corporation Reports 2012 Third Quarter

Precision Drilling Corporation Reports 2012 Third Quarter Financial
Results 
CALGARY, ALBERTA, CANADA -- (Marketwire) -- 10/25/12 --  
(Canadian dollars except as indicated)  
This news release contains "forward-looking information and
statements" within the meaning of applicable securities laws. For a
full disclosure of the forward-looking information and statements and
the risks to which they are subject, see the "Cautionary Statement
Regarding Forward-Looking Information and Statements" later in this
news release.  
Precision Drilling Corporation ("Precision" or the "Corporation")
(TSX:PD) (NYSE:PDS) reported net earnings of $39 million or $0.14 per
diluted share for the three months ended September 30, 2012 compared
to net earnings of $83 million or $0.29 per diluted share for the
third quarter of 2011. In the quarter Precision recognized an after
tax foreign exchange loss that reduced net earnings by $4 million and
net earnings per diluted share by $0.01 compared to the prior year
when an after tax foreign exchange gain was recognized that increased
net earnings by $25 million and net earnings per diluted share by
$0.09.  
Revenue for the third quarter of 2012 was $485 million and earnings
before income taxes, other items and depreciation and amortization
("EBITDA") totalled $151 million compared to $493 million and $186
million, respectively, during the comparable period in 2011. Third
quarter 2012 revenue and EBITDA were lower than the comparable period
in 2011 primarily due to lower industry activity in Canada and the
United States and start-up costs incurred in international
operations.   
Third quarter 2012 revenue and EBITDA were higher than the second
quarter 2012 revenue and EBITDA by $103 million and $54 million,
respectively, due to the seasonality of oilfield service activity in
Canada known as spring break-up that typically takes place during the
second quarter. This is a time in Canada where heavy equipment cannot
change locations due to road bans and normally occurs in March to
June of each year.  
In the Contract Drilling Services segment, average drilling rig
revenue per day increased by US$2,090 to US$23,110 in Precision's
United States operations and by $2,484 to $20,099 in the Canadian
operations in the third quarter of 2012 over the comparable quarter
in 2011. Average revenue per day in the third quarter of 2012
decreased over the second quarter by US$35 and $550 in the United
States and Canadian operations, respectively. Declines in spot market
pricing is the primary reason for the rate decreases from the second
quarter in both the United States and Canada, while revenue from
winter related operations in the second quarter also contributed to
the decrease in Canada.   
For the nine months ended September 30, 2012, Precision reported net
earnings of $169 million or $0.59 per diluted share compared to net
earnings of $165 million or $0.57 per diluted share for the same
period of 2011. Revenue for the first nine months of 2012 was $1,507
million compared to $1,364 million for the corresponding period of
2011. EBITDA totalled $494 million for the first nine months of 2012
compared to $465 million in the corresponding period of 2011. The
year-over-year increase in revenue resulted from higher pricing in
the Contract Drilling Services and Completion and Production Services
segments, growth in Precision's international drilling and growth in
the Corporation's directional drilling businesses partially offset by
lower drilling activity levels. Average drilling rig revenue per
utilization day was up 16% in Canada and up 9% in the United States
for the first nine months of the year when compared with the same
period in 2011 while activity, as measured by drilling utilization
days, decreased 12% in Canada and 5% in the United States.  
Precision signed long-term contracts for two specialized new build
service rigs to work for two separate customers in heavy oil
operations in Canada.   
Precision is increasing its 2012 capital expenditure plan from $875
million to $921 million. This increase is primarily due to
expenditures associated with additional rig upgrade contracts and the
two new service rig contracts. 
Kevin Neveu, Precision's President and Chief Executive Officer
stated: "Precision's third quarter results reflect weakening North
American customer demand, a muted Canadian seasonal recovery,
continued reductions in dry gas and gas-liquids drilling and a pause
in the rapid growth of oil directed drilling in the North Dakota
Bakken.  Despite these challenging market conditions, we continue to
see customer demand through additional long-term contracts for
upgrades of Precision's existing rigs and for Precision's newly
introduced "rack and pinion" heavy oil well service rig.  These
additional customer commitments coupled with the 11 contracted new
build Super Series drilling rigs deployed during the third quarter
demonstrate our ability to seize market opportunities backed with
firm customer commitments."    
"Also, I believe it is important to note, that despite headwinds,
Precision has only two drilling rigs currently classified as "idle
but contracted" and we have not experienced any early contract
terminations this year.  I remain pleased that Precision's High
Performance, High Value services continue to provide leading-edge
performance for our customers in their quest to improve drilling
efficiency and reduce total well cost; however, our value goes well
beyond delivering efficiency.  Our Precision rigs and crews deliver
the consistency, predictability and repeatability our customers need
to achieve cost reductions while importantly mitigating the safety
and environmental risks which concern our customers and the
communities in which we operate."      
"Precision continues to make investments in our people, technology
and systems, and as of today, we have delivered 51 Super Series rigs
since the beginning of 2010 and upgraded approximately 35 existing
rigs. Precision now has 171 Tier 1 rigs in our fleet, compared to 109
at the beginning of 2010. The fleet enhancement over the past few
years is one example of our commitment to delivering High
Performance, High Value services to our customers." 
"This past quarter, the seasonal recovery in drilling activity never
fully materialized with Canadian industry drilling activity down 29
percent from this time last year. The U.S. industry rig count is down
10 percent from this time last year and down seven percent since the
beginning of the third quarter. Across North America, and despite
healthy oil prices, we have seen a reduction in demand from our
customers as they have moderated spending during the second half of
the year in an effort to operate within stated 2012 budgets."  
"Despite current market pressures, Precision remains focused on
ensuring we deliver High Performance, High Value services that we
know are critical to our customers in meeting their objectives."
concluded Mr. Neveu. 
SELECT FINANCIAL AND OPERATING INFORMATION 


 
                                                                            
(Stated in                                                                  
 thousands of                                                               
 Canadian                                                                   
 dollars, except                                                            
 per share        Three months ended               Nine months ended        
 amounts)             September 30,                   September 30,         
                                                                            
                                          %                               % 
                     2012      2011  Change        2012        2011  Change 
----------------------------------------------------------------------------
Revenue          $484,761  $492,944    (1.7) $1,506,793  $1,363,619    10.5 
EBITDA(1)         151,000   186,248   (18.9)    493,766     465,225     6.1 
Net earnings       39,357    83,468   (52.8)    168,699     165,431     2.0 
Cash provided by                                                            
 operations        61,183    20,281   201.7     498,969     313,915    59.0 
Funds provided                                                              
 by                                                                         
 operations(1)    146,124    73,182    99.7     456,236     336,285    35.7 
Capital                                                                     
 spending:                                                                  
 Expansion                                                                  
  capital                                                                   
  expenditures    177,783   136,591    30.2     473,131     234,107   102.1 
 Upgrade capital                                                            
  expenditures     23,166    45,619   (49.2)    107,388      93,733    14.6 
 Maintenance and                                                            
  infrastructure                                                            
  capital                                                                   
  expenditures     37,701    37,466     0.6     100,888      70,530    43.0 
 Proceeds on                                                                
  sale             (5,011)   (4,610)    8.7     (13,820)     (8,694)   59.0 
----------------------------------------------------------------------------
Net capital                                                                 
 spending         233,639   215,066     8.6     667,587     389,676    71.3 
Business                                                                    
 acquisitions                                                               
 (net of cash                                                               
 acquired)              -    59,709  (100.0)         25      92,886  (100.0)
Net earnings -                                                              
 per share:                                                                 
 Basic               0.14      0.30   (53.3)       0.61        0.60     1.7 
 Diluted             0.14      0.29   (51.7)       0.59        0.57     3.5 
                                                                            
Contract                                                                    
 drilling rig                                                               
 fleet                363       366    (0.8)        363         366    (0.8)
Drilling rig                                                                
 utilization                                                                
 days:                                                                      
 Canada             7,735    10,505   (26.4)     24,110      27,246   (11.5)
 United States      8,305     9,716   (14.5)     26,583      28,053    (5.2)
 International        736       177   315.8       1,319         530   148.9 
Service rig                                                                 
 fleet                213       220    (3.2)        213         220    (3.2)
Service rig                                                                 
 operating                                                                  
 hours(2)          72,766    86,146   (15.5)    217,368     229,301    (5.2)
----------------------------------------------------------------------------

 
(1) See "ADDITIONAL GAAP MEASURES".  
(2) Prior year comparatives have changed to include United States
based service rig activity.  
FINANCIAL POSITION AND RATIOS 


 
(Stated in thousands of Canadian dollars, except  September 30, December 31,
 ratios)                                                   2012         2011
----------------------------------------------------------------------------
Working capital                                     $   323,653  $   610,429
Long-term debt(1)                                   $ 1,206,425  $ 1,239,616
Total long-term financial liabilities               $ 1,232,220  $ 1,267,040
Total assets                                        $ 4,506,689  $ 4,427,874
Long-term debt to long-term debt plus equity                                
 ratio(1)                                                  0.34         0.37
----------------------------------------------------------------------------

 
(1) Net of unamortized debt issue costs.  
Revenue in the third quarter of 2012 was $8 million lower than the
prior year period. The decrease was mainly due to a year-over-year
decrease in drilling utilization days in both Canada and the United
States partially offset by higher drilling rig revenue per day in
both Canada and the United States. In addition, Precision experienced
a four-fold increase in international drilling rig activity with an
average of eight rigs working during the quarter compared with two in
the prior year period. Revenue in Precision's Contract Drilling
Services segment decreased by 1% while revenue decreased 7% in the
Completion and Production Services segment in the third quarter of
2012 compared to the prior year.  
EBITDA margin (EBITDA as a percentage of revenue) was 31% for the
third quarter of 2012 compared to 38% for the same period in 2011.
The decrease in EBITDA margin for the quarter was primarily
attributable to lower equipment utilization and higher costs offset
partially by higher average dayrates in both Canada and the United
States. Higher operating costs in the quarter were the result of crew
labour costs and increased maintenance costs in the United States and
start-up costs internationally. Precision's term contract position
with customers, a highly variable operating cost structure and
economies achieved through vertical integration of the supply chain
continue to support EBITDA margins. 
In the Contract Drilling Services segment, Precision currently owns
365 contract drilling rigs, including 203 in Canada, 154 in the
United States and eight rigs in international locations and the
capacity to run concurrently 90 directional drilling jobs.
Precision's Completion and Production Services segment includes 190
service rigs, 19 snubbing units, four coil tubing units, 107
wastewater treatment units, 67 drilling and base camps and a broad
mix of rental equipment.  
During the quarter, an average of 84 drilling rigs worked in Canada,
90 worked in the United States and eight worked internationally
totalling an average of 182 rigs. This compares with an average of
222 rigs in the third quarter a year ago.  
Oil prices were higher and natural gas prices were lower during the
third quarter of 2012 compared with the year ago period. For the
third quarter of 2012, West Texas Intermediate crude oil averaged
US$92.26 per barrel, 3% higher when compared to US$89.59 per barrel
in the same period in 2011. AECO natural gas spot prices averaged
$2.28 per MMBtu, 38% lower than the third quarter 2011 average of
$3.66 per MMBtu. In the United States, Henry Hub natural gas spot
prices averaged US$2.88 per MMBtu in the third quarter of 2012, a
decrease of 30% over the third quarter 2011 average of US$4.12 per
MMBtu.  
Summary for the three months ended September 30, 2012: 


 
--  Operating earnings were $74 million and 15% of revenue, compared to $122
    million and 25% of revenue in the third quarter of 2011. Operating
    earnings were negatively impacted by higher depreciation costs
    associated with new depreciation policies on Tier 3 rigs and newer
    equipment in our Contract Drilling and Completion and Production
    services segments, the decrease in activity in Precision's United States
    and Canadian drilling operations, start-up costs internationally and
    higher labour and maintenance costs in the United States operations. In
    general, activity in Canada was down from the prior year due to
    unusually wet weather in the western Canada sedimentary basin continuing
    into July as well as spending restraint exhibited by our customers.  
--  General and administrative expenses were $33 million, an increase of $9
    million from the third quarter of 2011, due to incremental costs
    associated with growth in international and directional drilling
    activity along with additional costs associated with incentive
    compensation tied to the price of Precision's common shares.  
--  Finance charges were $22 million, a decrease of $12 million from the
    third quarter of 2011 due to interest expense associated with Canadian
    income tax settlements in the prior year of $15 million partially offset
    by an increase in the average long-term debt balance. 
--  Capital expenditures for the purchase of property, plant and equipment
    were $239 million in the third quarter, an increase of $19 million over
    the same period in 2011. Capital spending for the third quarter of 2012
    included $178 million for expansion capital, $23 million for upgrade
    capital and $38 million for the maintenance of existing assets and
    infrastructure. 
--  Average revenue per utilization day for contract drilling rigs increased
    in the third quarter of 2012 to US$23,110 from the prior year third
    quarter of US$21,020 in the United States and increased in Canada to
    $20,099 in the third quarter of 2012 from $17,615 for the prior year
    period. The increase in revenue rates for the third quarter in Precision
    reflects the higher percentage of utilization days realized from Tier 1
    rigs relative to total days and the pass through of increased labour
    costs. In the United States, for the third quarter of 2012, 73% of
    Precision's working rigs were working under term contracts compared to
    79% in the 2011 comparative period. Turnkey revenue for the third
    quarter of 2012 was US$10 million compared with US$7 million in 2011.
    Within Precision's Completion and Production Services segment, average
    hourly rates for service rigs were $734 in the third quarter of 2012
    compared to $683 in the third quarter of 2011. 
--  Average operating costs per utilization day for drilling rigs increased
    in the third quarter of 2012 to US$14,816 from the prior year period of
    US$12,467 in the United States and increased in Canada to $9,828 in the
    third quarter of 2012 from $8,922. The cost increase in the United
    States was primarily due to crew labour cost increases and higher repair
    and maintenance costs. The cost increase in Canada was primarily due to
    a labour rate increase that became effective in the fourth quarter of
    2011. Within Precision's Completion and Production Services segment,
    average hourly operating costs for service rigs in Canada increased to
    $519 in the third quarter of 2012 as compared to $484 in the third
    quarter of 2011, primarily due to a labour rate increase and higher fuel
    costs. Typically labour rate increases are recovered in dayrate
    increases. 
--  Precision realized revenue from directional services of $33 million in
    the third quarter of 2012 compared with $21 million in the prior year
    period. 
--  Funds provided by operations in the third quarter of 2012 were $146
    million, an increase of $73 million from the prior year quarter of $73
    million.  

 
Summary for the nine months ended September 30, 2012: 


 
--  Revenue for the first nine months of 2012 was $1,507 million, an
    increase of 10% from the 2011 period. 
--  Operating earnings were $276 million, a decrease of $9 million or 3%
    from 2011. Operating earnings were 18% of revenue in 2012 compared to
    21% in 2011. 
--  General and administrative costs were $97 million, an increase of $7
    million over the first nine months of 2011 primarily due to incremental
    costs associated with the growth in international and directional
    drilling activity partially offset by a decrease in incentive
    compensation costs tied to the performance of Precision's common shares.
--  Finance charges were $65 million, a decrease of $27 million from the
    first nine months of 2011 due to the 2011 charge of $27 million for the
    make-whole premium from refinancing a previously outstanding debt and
    interest expense associated with Canadian income tax settlements offset
    by higher interest costs from an increased average long-term debt
    balance. 
--  Funds provided by operations in the first nine months of 2012 were $456
    million, an increase of $120 million from the prior year comparative
    period of $336 million. 
--  Capital expenditures for the purchase of property, plant and equipment
    were $681 million in the first nine months of 2012, an increase of $283
    million over the same period in 2011. Capital spending for 2012 to date
    included $473 million for expansion capital, $107 million for upgrade
    capital and $101 million for the maintenance of existing assets and
    infrastructure. 

 
OUTLOOK 
Precision has a strong portfolio of long-term customer contracts that
provides a base level of activity and revenue. Precision has an
average of 119 rigs committed under term contracts for the fourth
quarter of 2012, an average of 100 rigs contracted for the first
quarter of 2013 and 91 for the second quarter of 2013. In Canada,
term contracted rigs normally generate 250 utilization days per rig
year due to the seasonal nature of well access, whereas in the United
States and international they usually generate 365 utilization days
per rig year in most regions.  
Capital expenditures are expected to be approximately $921 million
for 2012, of which $681 million has been expended during the first
nine months of 2012. The expected 2012 total includes $139 million
for sustaining and infrastructure expenditures and is based upon
currently anticipated activity levels for 2012. Additionally, $631
million is slated for expansion capital and includes the cost to
complete the drilling rigs from the 2011 new build rig program and
the new build rigs for 2012. The total capital expenditures also
include an estimated $151 million to upgrade approximately 14 rigs in
2012. These long-lead time items include top drives, masts and
engines, that can be used for North American or international new
build rig opportunities and rig tier upgrades. Precision expects that
the $921 million will be split $802 million for the Contract Drilling
segment and $119 million for the Completion and Production Services
segment. An additional $90 million of committed expansion capital,
upgrades in progress and long-lead commitments are expected to carry
forward to 2013.  
Demand remains solid for existing Tier 1 Super Series rigs for both
Canada and the United States, however, customer's interest in
contracting new build Super Series rigs has softened. Precision
believes it will have opportunities to contract additional new build
and upgraded rigs in late 2012 and during 2013, although the pace of
contracts awards is likely to be significantly slower than the pace
during 2011. According to industry sources, as at October 19, 2012,
the United States active land drilling rig count was down 9% from the
prior year period while the Canadian drilling rig count had decreased
about 29%.   
Natural gas production in the United States has moderated, but
remains strong despite reduced drilling activity. United States
natural gas storage levels as at October 12, 2012 are 7% above the
five-year average and 5% above storage levels of a year ago. This
strongly influences Canadian activity since Canada has historically
exported a significant portion of its natural gas production to the
United States. The increase in oil and liquids rich natural gas
drilling in areas like the Permian Basin, Bakken and Eagle Ford has
been strong and the United States oil rig count as at October 19,
2012 is 30% higher than it was a year ago. On average, Precision has
more equipment working in oil related plays than at any time in its
history with approximately 84% of Precision's active rig count
drilling for oil targets. 
With high storage levels, consistent production and the view that
North America has an oversupply of natural gas, gas prices have
remained at low levels. To date, customer changes in natural gas
drilling plans are reflected in a decline in the rig count targeting
dry gas plays. If low natural gas prices continue, Precision and the
North American drilling industry can expect continued weak demand for
natural gas drilling. However, the budgets of many of our customers
are driven in part by cash flow from existing hydrocarbon production,
which would be positively influenced by higher gas prices. 
SEGMENTED FINANCIAL RESULTS  
Precision's operations are reported in two segments; the Contract
Drilling Services segment includes the drilling rig, directional
drilling, oilfield supply and manufacturing divisions; and the
Completion and Production Services segment includes the service rig,
snubbing, coiled tubing, rental, camp and catering and wastewater
treatment divisions.  


 
(Stated in                                                                  
 thousands of                                                               
 Canadian        Three months ended               Nine months ended         
 dollars)             September 30,                   September 30,         
                                                                            
                                                                            
                                          %                               % 
                     2012      2011  Change        2012        2011  Change 
----------------------------------------------------------------------------
Revenue:                                                                    
 Contract                                                                   
  Drilling                                                                  
  Services       $409,889  $413,131    (0.8) $1,273,136  $1,137,640    11.9 
 Completion and                                                             
  Production                                                                
  Services         77,506    83,153    (6.8)    240,854     234,960     2.5 
 Inter-segment                                                              
  eliminations     (2,634)   (3,340)  (21.1)     (7,197)     (8,981)  (19.9)
----------------------------------------------------------------------------
                 $484,761  $492,944    (1.7) $1,506,793  $1,363,619    10.5 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
EBITDA:(1)                                                                  
 Contract                                                                   
  Drilling                                                                  
  Services       $146,080  $171,950   (15.0) $  477,112  $  448,669     6.3 
 Completion and                                                             
  Production                                                                
  Services         23,143    28,010   (17.4)     71,332      70,694     0.9 
 Corporate and                                                              
  other           (18,223)  (13,712)   32.9     (54,678)    (54,138)    1.0 
----------------------------------------------------------------------------
                 $151,000  $186,248   (18.9) $  493,766  $  465,225     6.1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
(1) See "ADDITIONAL GAAP MEASURES".  
SEGMENT REVIEW OF CONTRACT DRILLING SERVICES 


 
(Stated in thousands of Canadian                                            
 dollars, except where noted)     Three months ended September 30,          
                                                                            
                                               2012          2011  % Change 
----------------------------------------------------------------------------
Revenue                                   $ 409,889     $ 413,131      (0.8)
Expenses:                                                                   
 Operating                                  252,556       233,957       7.9 
 General and administrative                  11,253         7,224      55.8 
----------------------------------------------------------------------------
EBITDA(1)                                   146,080       171,950     (15.0)
 Depreciation                                67,659        56,158      20.5 
----------------------------------------------------------------------------
Operating earnings(1)                     $  78,421     $ 115,792     (32.3)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings as a percentage                                          
 of revenue                                    19.1%         28.0%          
----------------------------------------------------------------------------
Drilling rig revenue per                                                    
 utilization day in Canada                $  20,099     $  17,615      14.1 
----------------------------------------------------------------------------
Drilling rig revenue per                                                    
 utilization day in the United                                              
 States(2)                              US$  23,110   US$  21,020       9.9 
----------------------------------------------------------------------------
                                                                            
 
(Stated in thousands of Canadian                                            
 dollars, except where noted)     Nine months ended September 30,           
                                                                            
                                             2012            2011  % Change 
----------------------------------------------------------------------------
Revenue                               $ 1,273,136     $ 1,137,640      11.9 
Expenses:                                                                   
 Operating                                765,749         665,035      15.1 
 General and administrative                30,275          23,936      26.5 
----------------------------------------------------------------------------
EBITDA(1)                                 477,112         448,669       6.3 
 Depreciation                             193,666         156,631      23.6 
----------------------------------------------------------------------------
Operating earnings(1)                 $   283,446     $   292,038      (2.9)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating earnings as a percentage                                          
 of revenue                                  22.3%           25.7%          
----------------------------------------------------------------------------
Drilling rig revenue per                                                    
 utilization day in Canada            $    20,699     $    17,840      16.0 
----------------------------------------------------------------------------
Drilling rig revenue per                                                    
 utilization day in the United                                              
 States(2)                          US$    23,162   US$    21,302       8.7 
----------------------------------------------------------------------------

 
(1) See "ADDITIONAL GAAP MEASURES". 
(2) Includes revenue from idle but contracted rig days and lump sum
payouts. 


 
                                           Three months ended September 30, 
Canadian onshore drilling                                                   
 statistics:(1)                                 2012                   2011 
----------------------------------------------------------------------------
                               Precision Industry(2)  Precision Industry(2) 
----------------------------------------------------------------------------
Number of drilling rigs (end                                                
 of period)                          202         825        205         810 
Drilling rig operating days                                                 
 (spud to release)                 6,957      30,220      9,487      40,763 
Drilling rig operating day                                                  
 utilization                          38%         40%        51%         55%
Number of wells drilled              948       3,607      1,005       3,601 
Average days per well                7.3         8.4        9.4        11.3 
Number of metres drilled                                                    
 (000s)                            1,491       5,853      1,594       6,787 
Average metres per well            1,573       1,623      1,586       1,885 
Average metres per day               214         194        168         167 
----------------------------------------------------------------------------
                                            Nine months ended September 30, 
Canadian onshore drilling                                                   
 statistics:(1)                                  2012                  2011 
----------------------------------------------------------------------------
                                Precision Industry(2) Precision Industry(2) 
----------------------------------------------------------------------------
Number of drilling rigs (end of                                             
 period)                              202         825       205         810 
Drilling rig operating days                                                 
 (spud to release)                 21,579      93,470    24,393     104,108 
Drilling rig operating day                                                  
 utilization                           41%         42%       44%         48%
Number of wells drilled             2,223       7,940     2,492       8,634 
Average days per well                 9.7        11.8       9.8        12.1 
Number of metres drilled (000s)     3,798      15,013     3,936      16,052 
Average metres per well             1,708       1,891     1,579       1,859 
Average metres per day                176         161       161         154 
----------------------------------------------------------------------------

 
(1) Canadian operations only.  
(2) Canadian Association of Oilwell Drilling Contractors ("CAODC")
and Precision - excludes non-CAODC rigs and non-reporting CAODC
members. 


 
United States onshore drilling                                              
 statistics:(1)                                  2012                   2011
----------------------------------------------------------------------------
                               Precision  Industry(2) Precision  Industry(2)
----------------------------------------------------------------------------
Average number of active land                                               
 rigs for quarters ended:                                                   
 March 31                            104        1,947       100        1,695
 June 30                              97        1,924       102        1,803
 September 30                         90        1,855       106        1,915
----------------------------------------------------------------------------
Year to date average                  97        1,909       103        1,805
----------------------------------------------------------------------------

 
(1) United States lower 48 land operations only.  
(2) Baker Hughes rig counts. 
Contract Drilling Services segment revenue for the third quarter of
2012 decreased by 1% to $410 million and EBITDA decreased by 15% to
$146 million compared to the same period in 2011. The decrease in
revenue was due to lower activity for both Canada and the United
States partially offset by higher average rates per day in Canada and
the United States, increased activity internationally and higher
directional drilling revenues. The decrease in EBITDA was the result
of lower activity in Canada and the United States, start-up costs
internationally, lower margin in the United States as a result of
increased crew labour and maintenance costs. 
Activity in North America was centered on oil and liquids rich
natural gas related drilling activity. In the third quarter, drilling
rig revenue per utilization day over the prior year was up 14% in
Canada and 10% in the United States as a result of increased rates
for rigs working on well-to-well contracts and new build rigs.  
Drilling rig utilization days in Canada (drilling days plus move
days) during the third quarter of 2012 were 7,735, a decrease of 26%
compared to 10,505 in 2011 due to lower industry activity with low
natural gas prices and uncertainty in global markets with West Texas
Intermediate crude oil prices dipping below $80 per barrel in late
June. Drilling rig utilization days for Precision in the United
States were 15% lower than the same quarter of 2011 due to a
continued reduction in natural gas targeted drilling. On average,
Precision had eight rigs working internationally as the Saudi Arabia
based business ramped up and Precision had mobilized three additional
rigs into Mexico during the second quarter of 2012.  
Contract Drilling Services segment operating costs were 62% of
revenue for the quarter which is five percentage points higher than
the prior year period. Higher operating costs in the quarter were the
result of start-up costs internationally and increased maintenance
costs in the United States. In addition, crew wage increases in
Canada and the United States in the fourth quarter of 2011
contributed to the year-over-year increase.  
Quarterly depreciation in the Contract Drilling Services segment
increased 20% from the prior year. As discussed in Management's
Discussion and Analysis for the year ended December 31, 2011,
Precision changed its depreciation policy on certain Tier 3 rigs from
the unit of production method to straight-line over four years
resulting in approximately $6 million in additional depreciation in
the quarter. Additional increases in depreciation are the result of a
greater proportion operating days from our Tier 1 drilling rigs in
2012 relative to 2011 and depreciation from the growth in directional
drilling and international contract drilling. With the exception of
certain Tier 3 equipment and directional drilling equipment, contract
drilling operations use the unit of production method of calculating
depreciation.  
SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES 


 
(Stated in thousands                                                        
 of Canadian dollars, Three months ended          Nine months ended         
 except where noted)      September 30,               September 30,         
                                                                            
                                              %                           % 
                         2012      2011  Change      2012      2011  Change 
----------------------------------------------------------------------------
Revenue               $77,506  $ 83,153    (6.8) $240,854  $234,960     2.5 
Expenses:                                                                   
 Operating             50,474    51,750    (2.5)  157,943   153,212     3.1 
 General and                                                                
  administrative        3,889     3,393    14.6    11,579    11,054     4.7 
----------------------------------------------------------------------------
EBITDA(1)              23,143    28,010   (17.4)   71,332    70,694     0.9 
 Depreciation           7,640     6,676    14.4    21,775    18,830    15.6 
----------------------------------------------------------------------------
Operating earnings(1) $15,503  $ 21,334   (27.3) $ 49,557  $ 51,864    (4.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Operating earnings as                                                       
 a percentage of                                                            
 revenue                 20.0%     25.7%             20.6%     22.1%        
----------------------------------------------------------------------------
                                                                            
Well servicing                                                              
 statistics:                                                                
 Number of service                                                          
  rigs (end of period)    213       220    (3.2)      213       220    (3.2)
 Service rig operating                                                      
  hours(2)             72,766    86,146   (15.5)  217,368   229,301    (5.2)
 Service rig operating                                                      
  hour utilization(2)      37%       43%               37%       38%        
 Service rig revenue                                                        
  per operating                                                             
  hour(2)             $   734  $    683     7.5  $    745  $    672    10.9 
----------------------------------------------------------------------------

 
(1) See "ADDITIONAL GAAP MEASURES".  
(2) Prior year comparatives have changed to include United States
based service rig activity.  
Completion and Production Services segment revenue for the third
quarter decreased by 7% from the third quarter of 2011 to $78 million
and EBITDA decreased by 17% to $23 million. The decrease in revenue
and EBITDA is attributed to a decrease in activity partially offset
by increased service rig rates.  
Well servicing and snubbing activity decreased 16% from the prior
year period, with the fleet generating 72,766 operating hours in the
third quarter of 2012 compared with 86,146 hours in the prior year
quarter for utilization of 37% and 43%, respectively. The decrease
was a result of lower service rig activity compared to the previous
year which had a very active quarter with customers performing well
completion and production work on a backlog of oil wells from a
prolonged spring break-up. Approximately 98% of the third quarter
service rig activity was oil related. New well completions were 57%
lower than the prior year quarter and accounted for 8% of service rig
operating hours in the third quarter compared to 15% in the same
quarter in 2011. Precision's rental division benefitted from new
equipment additions in the quarter, but utilization for some
equipment decreased in conjunction with lower industry drilling and
completion activity. 
Average service rig revenue increased $51 per operating hour to $734
from the prior year period due to rig mix and increased labour and
operating costs passed through to customers. 
Operating costs as a percentage of revenue in the third quarter of
2012 was 65%, compared to 62% in the same period of 2011. Operating
costs per service rig hour increased over the comparable period in
2011 primarily due to higher wages and fuel prices.  
Depreciation in the Completion and Production Services segment in the
third quarter of 2012 was 14% higher than the prior year due to the
addition of new assets to the service rig, camp and rental equipment
fleet. The well servicing division uses the unit of production method
of calculating depreciation while the other operating divisions
within the Completion and Production Services segment use the
straight-line method. 
SEGMENT REVIEW OF CORPORATE AND OTHER 
Precision views its corporate segment as support functions that
provide assistance to more than one segment. The Corporate and other
segment had an EBITDA loss of $18 million for the third quarter of
2012, $5 million more than the prior year comparative period
primarily due to increased costs associated with share based
performance incentive plans. 
OTHER ITEMS  
Net financial charges for the quarter were $22 million, a decrease of
$12 million from the third quarter of 2011 due to interest expense
associated with Canadian income tax settlements in the prior year of
$15 million partially offset by an increase in the average long-term
debt balance.  
Finance charges for the three and nine month periods ended September
30, 2012 and 2011 are as follows: 


 
                                     Three months ended   Nine months ended 
                                          September 30,       September 30, 
(Stated in thousands of Canadian                                            
 dollars)                                2012      2011      2012      2011 
----------------------------------------------------------------------------
Interest:                                                                   
 Long-term debt                      $ 21,181  $ 18,942  $ 63,818  $ 48,415 
 Tax settlement and reassessment            -    14,621         -    14,621 
 Other                                     14        55       109       101 
 Income                                  (641)     (317)   (1,621)     (735)
Amortization of debt issue costs        1,038       931     3,025     2,462 
Loss on settlement of debt                                                  
 facilities                                 -         -         -    26,942 
Debt amendment fees                       149         -       149     1,134 
----------------------------------------------------------------------------
Finance charges                      $ 21,741  $ 34,232  $ 65,480  $ 92,940 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The Corporation had a foreign exchange loss of $5 million during the
third quarter of 2012 due to the weakening of the U.S. dollar versus
the Canadian dollar and the impact thereof on the net U.S. dollar
denominated monetary position in the Canadian dollar based companies. 
Precision's effective tax rate on earnings before income taxes for
the nine months ended September 30, 2012 was 18%.  
LIQUIDITY AND CAPITAL RESOURCES  
The oilfield services business is inherently cyclical in nature.
Precision employs a disciplined approach to minimize costs through
operational management practices and a variable cost structure, and
to maximize revenues through term contract positions with a focus of
maintaining a strong balance sheet. This operational discipline
provides Precision with the financial flexibility to capitalize on
strategic acquisitions and internal growth opportunities at all
points in the business cycle.  
Operating within a variable cost structure, Precision's maintenance
capital expenditures are tightly governed by and responsive to
activity levels with additional cost savings leverage provided
through Precision's internal manufacturing and supply divisions.
Expansion capital for new build rig programs require two to five year
term contracts in order to mitigate capital recovery risk.  
During the quarter Precision amended its senior secured revolver
("Secured Facility") with a syndicate of lenders. The amendment
increases the amount available under the Secured Facility to US$850
million from US$550 million and extends the maturity date from
November 17, 2015 to November 17, 2017. Precision also increased its
operating facilities to $80 million from $40 million in the quarter.  
Liquidity remains sufficient as Precision had a cash balance of $227
million and the US$850 million Secured Facility remains undrawn
except for US$27 million in outstanding letters of credit as at
September 30, 2012. In addition to the Secured Facility, Precision
has available $80 million in operating facilities which remain
undrawn except for $21 million in outstanding letters of credit as at
September 30, 2012. 
As at September 30, 2012 and December 31, 2011 Precision had the
following long-term debt balances: 


 
                                               September 30,   December 31, 
(Stated in thousands of Canadian dollars)               2012           2011 
----------------------------------------------------------------------------
Senior secured revolving credit facility         $         -    $         - 
Unsecured senior notes:                                                     
  6.625% senior notes due 2020 (US$650                                      
   million)                                          639,405        661,050 
  6.5% senior notes due 2021 (US$400 million)        393,480        406,800 
  6.5% senior notes due 2019                         200,000        200,000 
----------------------------------------------------------------------------
                                                   1,232,885      1,267,850 
Less net unamortized debt issue costs                (26,460)       (28,234)
----------------------------------------------------------------------------
                                                 $ 1,206,425    $ 1,239,616 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
As at September 30, 2012, the Corporation was in compliance with the
covenants under the Secured Facility and expects to remain in
compliance with such covenants and have complete access to credit
lines during the remainder of 2012 and for 2013.  
The current blended cash interest cost of Precision's debt is
approximately 6.6%.  
Precision has designated its U.S. dollar denominated long-term debt
as a hedge of its investment in its United States operations. To be
accounted for as a hedge, the foreign currency denominated long-term
debt must be designated and documented as such and must be effective
at inception and on an ongoing basis. 
QUARTERLY FINANCIAL SUMMARY  


 
(Stated in thousands of Canadian                                            
 dollars, except per share                                                  
 amounts)                                                                   
                                       2011               2012              
----------------------------------------------------------------------------
Quarters ended                  December 31  March 31   June 30 September 30
----------------------------------------------------------------------------
Revenue                           $ 587,408 $ 640,066 $ 381,966    $ 484,761
EBITDA(1)                           229,839   245,574    97,192      151,000
Net earnings:                        28,046   111,081    18,261       39,357
 Per basic share                       0.10      0.40      0.07         0.14
 Per diluted share                     0.10      0.39      0.06         0.14
Funds provided by operations(1)     256,103   247,739    62,373      146,124
Cash provided by operations         218,857   162,440   275,346       61,183
----------------------------------------------------------------------------
                                       2010               2011              
----------------------------------------------------------------------------
Quarters ended                  December 31  March 31   June 30 September 30
----------------------------------------------------------------------------
Revenue                           $ 435,537 $ 525,350 $ 345,325    $ 492,944
EBITDA(1)                           144,518   186,411    92,566      186,248
Net earnings (loss):                   (250)   65,560    16,403       83,468
 Per basic share                          -      0.24      0.06         0.30
 Per diluted share                        -      0.23      0.06         0.29
Funds provided by operations(1)     133,903   192,337    70,766       73,182
Cash provided by operations          75,064   117,322   176,312       20,281
----------------------------------------------------------------------------

 
(1) See "ADDITIONAL GAAP MEASURES". 
ADDITIONAL GAAP MEASURES 
Precision uses certain additional GAAP measures that are not defined
terms under IFRS to assess performance and believes these measures
provide useful supplemental information to investors. The following
are the measures Precision uses in assessing performance. 
EBITDA 
Management believes that in addition to net earnings (loss), EBITDA,
as derived from information reported in the Interim Consolidated
Statements of Earnings, is a useful supplemental measure as it
provides an indication of the results generated by Precision's
principal business activities prior to consideration of how those
activities are financed, the impact of foreign exchange, how the
results are taxed or how depreciation and amortization charges affect
results. 
Operating Earnings 
Management believes that in addition to net earnings (loss),
operating earnings as reported in the Interim Consolidated Statements
of Earnings is a useful supplemental measure as it provides an
indication of the results generated by Precision's principal business
activities prior to consideration of how those activities are
financed, the impact of foreign exchange or how the results are
taxed. 
Funds Provided by Operations 
Management believes that in addition to cash provided by operations,
funds provided by operations, as reported in the Interim Consolidated
Statements of Cash Flow is a useful supplemental measure as it
provides an indication of the funds generated by Precision's
principal business activities prior to consideration of working
capital, which is primarily made up of highly liquid balances. 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND
STATEMENTS  
Certain statements contained in this report, including statements
that contain words such as "could", "should", "can", "anticipate",
"estimate", "propose", "plan", "expect", "believe", "will", "may",
"continue", "project", "appears", "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: That Precision will remain
focused on ensuring it delivers High Performance, High Value services
that it knows are critical to its customers in meeting their
objectives; challenging market conditions; Precision's average number
of rigs committed under term contracts; Precision's expected capital
expenditures for 2012 and the anticipated uses of capital and the
timing of such expenditures including the carry forward to 2013;
demand for Super Series rigs; Precision believes it will have
opportunities to contract additional new build and upgraded rigs in
late 2012 and 2013, although the number of contracts is likely to be
significantly lower than the 42 rigs contracted during 2011; if low
natural gas prices continue, Precision and the North American
drilling industry can expect continued weak demand for natural gas
drilling; the producer budgets of many of Precision's customers are
driven in part by cash flow from existing hydrocarbon production,
which would be positively influenced by higher gas prices; and
Precision expects to remain in compliance with the covenants under
the Secured Facility and have complete access to credit lines during
the remainder of 2012 and for 2013.  
These forward-looking information and statements are based on certain
assumptions and analysis made by the Corporation in light of its
experience and its perception of historical trends, current
conditions and expected future developments as well as other factors
it believes are appropriate in the circumstances. However, whether
actual results, performance or achievements will conform to the
Corporation's expectations and predictions is subject to a number of
known and unknown risks and uncertainties which could cause actual
results to differ materially from the Corporation's expectations.
Such risks and uncertainties include, but are not limited to:
fluctuations in the price and demand for oil and natural gas;
fluctuations in the level of oil and natural gas exploration and
development activities; fluctuations in the demand for contract
drilling, well servicing and ancillary oilfield services; capital
market liquidity available to fund customer drilling programs;
availability of cash flow, debt and/or equity sources to fund the
Corporation's capital and operating requirements, as needed; the
effects of seasonal and weather conditions on operations and
facilities; the existence of competitive operating risks inherent in
contract drilling, well servicing and ancillary oilfield services;
general economic, market or business conditions; changes in laws or
regulations; interpretation of tax filing position for prior period
transactions; the availability of qualified personnel, management or
other key inputs; currency exchange fluctuations; and other
unforeseen conditions which could impact the use of services supplied
by Precision. 
Consequently, all of the forward-looking information and statements
made in this report are qualified by these cautionary statements and
there can be no assurance that the actual results or developments
anticipated by the Corporation will be realized or, even if
substantially realized, that they will have the expected consequences
to, or effects on, the Corporation or its business or operations.
Readers are therefore cautioned not to place undue reliance on such
forward-looking information and statements. Except as may be required
by law, the Corporation assumes no obligation to update publicly any
such forward-looking information and statements, whether as a result
of new information, future events or otherwise. 
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)   


 
                                                September 30,  December 31, 
(Stated in thousands of Canadian dollars)                2012          2011 
----------------------------------------------------------------------------
                                                                            
ASSETS                                                                      
Current assets:                                                             
  Cash                                            $   226,841   $   467,476 
  Accounts receivable                                 496,304       576,243 
  Inventory                                            14,541         7,163 
----------------------------------------------------------------------------
Total current assets                                  737,686     1,050,882 
Non-current assets:                                                         
  Income tax recoverable                               64,579        64,579 
  Property, plant and equipment                     3,334,704     2,942,296 
  Intangibles                                           6,923         6,471 
  Goodwill                                            362,797       363,646 
----------------------------------------------------------------------------
Total non-current assets                            3,769,003     3,376,992 
----------------------------------------------------------------------------
Total assets                                      $ 4,506,689   $ 4,427,874 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Accounts payable and accrued liabilities        $   371,161   $   436,667 
  Income tax payable                                   42,872         3,786 
----------------------------------------------------------------------------
Total current liabilities                             414,033       440,453 
                                                                            
Non-current liabilities:                                                    
  Share based compensation                              7,164        11,303 
  Provisions and other                                 18,631        16,121 
  Long-term debt                                    1,206,425     1,239,616 
  Deferred tax liabilities                            567,515       587,790 
----------------------------------------------------------------------------
Total non-current liabilities                       1,799,735     1,854,830 
                                                                            
Shareholders' equity:                                                       
  Shareholders' capital                             2,250,819     2,248,217 
  Contributed surplus                                  23,468        18,396 
  Retained earnings (deficit)                          85,539       (83,160)
  Accumulated other comprehensive loss                (66,905)      (50,862)
----------------------------------------------------------------------------
Total shareholders' equity                          2,292,921     2,132,591 
----------------------------------------------------------------------------
Total liabilities and shareholders' equity        $ 4,506,689   $ 4,427,874 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) 


 
                                 Three months ended       Nine months ended 
                                      September 30,           September 30, 
                                                                            
(Stated in thousands of Canadian                                            
 dollars, except per share                                                  
 amounts)                            2012      2011        2012        2011 
----------------------------------------------------------------------------
                                                                            
Revenue                          $484,761  $492,944  $1,506,793  $1,363,619 
                                                                            
Expenses:                                                                   
  Operating                       300,396   282,367     916,495     809,266 
  General and administrative       33,365    24,329      96,532      89,128 
----------------------------------------------------------------------------
Earnings before income taxes,                                               
 other items and depreciation                                               
 and amortization                 151,000   186,248     493,766     465,225 
Depreciation and amortization      76,754    64,504     218,247     180,416 
----------------------------------------------------------------------------
Operating earnings                 74,246   121,744     275,519     284,809 
Other items:                                                                
  Foreign exchange                  5,277   (34,105)      5,610     (31,300)
  Finance charges                  21,741    34,232      65,480      92,940 
  Other                                 -         -        (758)          - 
----------------------------------------------------------------------------
Earnings before income taxes       47,228   121,617     205,187     223,169 
Income taxes:                                                               
  Current                          15,135    38,730      47,160      40,882 
  Deferred                         (7,264)     (581)    (10,672)     16,856 
----------------------------------------------------------------------------
                                    7,871    38,149      36,488      57,738 
----------------------------------------------------------------------------
                                                                            
Net earnings                     $ 39,357  $ 83,468  $  168,699  $  165,431 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings per share:                                                     
  Basic                          $   0.14  $   0.30  $     0.61  $     0.60 
  Diluted                        $   0.14  $   0.29  $     0.59  $     0.57 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) 


 
                                     Three months ended   Nine months ended 
                                          September 30,       September 30, 
(Stated in thousands of Canadian                                            
 dollars)                                2012      2011      2012      2011 
----------------------------------------------------------------------------
Net earnings                         $ 39,357  $ 83,468  $168,699  $165,431 
Unrealized gain (loss) on                                                   
 translation of assets and                                                  
 liabilities of operations                                                  
 denominated in foreign currency      (53,424)   96,717   (49,476)   59,865 
Foreign exchange gain (loss) on net                                         
 investment hedge with U.S.                                                 
 denominated debt, net of tax          35,638   (80,034)   33,433   (62,835)
----------------------------------------------------------------------------
Comprehensive income                 $ 21,571  $100,151  $152,656  $162,461 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) 


 
                                   Three months ended     Nine months ended 
                                        September 30,         September 30, 
(Stated in thousands of Canadian                                            
 dollars)                             2012       2011       2012       2011 
----------------------------------------------------------------------------
Cash provided by (used in):                                                 
Operations:                                                                 
  Net earnings                   $  39,357  $  83,468  $ 168,699  $ 165,431 
  Adjustments for:                                                          
    Long-term compensation plans     3,830      1,144     15,057     15,156 
    Depreciation and                                                        
     amortization                   76,754     64,504    218,247    180,416 
    Foreign exchange                 5,886    (34,204)     6,092    (31,696)
    Finance charges                 21,741     34,232     65,480     92,940 
    Income taxes                     7,871     38,149     36,488     57,738 
    Other                             (320)     1,350      1,279     (1,070)
    Income taxes paid               (2,741)  (108,655)    (7,315)  (111,166)
    Income taxes recovered             271        154        613        400 
    Interest paid                   (7,181)    (7,307)   (49,964)   (32,646)
    Interest received                  656        347      1,560        782 
----------------------------------------------------------------------------
Funds provided by operations       146,124     73,182    456,236    336,285 
Changes in non-cash working                                                 
 capital balances                  (84,941)   (52,901)    42,733    (22,370)
----------------------------------------------------------------------------
                                    61,183     20,281    498,969    313,915 
Investments:                                                                
  Business acquisitions, net of                                             
   cash acquired                         -    (59,709)       (25)   (92,886)
  Purchase of property, plant                                               
   and equipment                  (238,650)  (219,676)  (681,407)  (398,370)
  Proceeds on sale of property,                                             
   plant and equipment               5,011      4,610     13,820      8,694 
  Changes in income tax                                                     
   recoverable                           -    108,176          -          - 
  Changes in non-cash working                                               
   capital balances                 11,295     27,427    (62,410)    10,637 
----------------------------------------------------------------------------
                                  (222,344)  (139,172)  (730,022)  (471,925)
Financing:                                                                  
  Repayment of long-term debt            -          -          -   (175,000)
  Premium paid on settlement of                                             
   unsecured senior notes                -          -          -    (26,688)
  Debt issue costs                  (2,855)    (8,946)    (2,855)   (13,304)
  Debt facility amendment costs       (149)         -       (149)    (1,134)
  Increase in long-term debt             -    381,520          -    581,520 
  Issuance of common shares on                                              
   the exercise of options             185        961      1,490      2,100 
  Changes in non-cash working                                               
   capital balances                      -          -          -       (746)
----------------------------------------------------------------------------
                                    (2,819)   373,535     (1,514)   366,748 
----------------------------------------------------------------------------
                                                                            
Effect of exchange rate changes                                             
 on cash and cash equivalents       (7,523)    39,275     (8,068)    35,576 
----------------------------------------------------------------------------
Increase (decrease) in cash and                                             
 cash equivalents                 (171,503)   293,919   (240,635)   244,314 
Cash and cash equivalents,                                                  
 beginning of period               398,344    207,226    467,476    256,831 
----------------------------------------------------------------------------
Cash and cash equivalents, end                                              
 of period                       $ 226,841  $ 501,145  $ 226,841  $ 501,145 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) 


 
(Stated in                                                                  
 thousands of                                                               
 Canadian                                                                   
 dollars)                                                                   
----------------------------------------------------------------------------
                                          Accumulated                       
                                                other  Retained             
              Shareholders' Contributed comprehensive  earnings       Total 
                    capital    surplus           loss (deficit)      equity 
----------------------------------------------------------------------------
Balance at                                                                  
 January 1,                                                                 
 2012           $ 2,248,217   $ 18,396     $  (50,862) $(83,160) $2,132,591 
Net earnings                                                                
 for the                                                                    
 period                   -          -              -   168,699     168,699 
Other                                                                       
 comprehensive                                                              
 income for                                                                 
 the period               -          -        (16,043)        -     (16,043)
Share options                                                               
 exercised            2,372       (882)             -         -       1,490 
Issued on                                                                   
 redemption of                                                              
 non-                                                                       
 management                                                                 
 directors                                                                  
 DSUs                   221       (221)             -         -           - 
Issued on                                                                   
 waiver of                                                                  
 right to                                                                   
 dissent by                                                                 
 dissenting                                                                 
 unitholder               9         (3)             -         -           6 
Share based                                                                 
 compensation                                                               
 expense                  -      6,178              -         -       6,178 
----------------------------------------------------------------------------
Balance at                                                                  
 September 30,                                                              
 2012           $ 2,250,819   $ 23,468     $  (66,905) $ 85,539  $2,292,921 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Stated in                                                                  
 thousands of                                                               
 Canadian                                                                   
 dollars)                                                                   
----------------------------------------------------------------------------
                                         Accumulated                        
                                               other   Retained             
             Shareholders' Contributed comprehensive   earnings       Total 
                   capital     surplus          loss  (deficit)      equity 
----------------------------------------------------------------------------
Balance at                                                                  
 January 1,                                                                 
 2011           $2,244,417  $   11,266    $  (46,220) $(276,637) $1,932,826 
Net earnings                                                                
 for the                                                                    
 period                  -           -             -    165,431     165,431 
Other                                                                       
 comprehensive                                                              
 loss for the                                                               
 period                  -           -        (2,970)         -      (2,970)
Share options                                                               
 exercised           3,198      (1,098)            -          -       2,100 
Issued on                                                                   
 redemption of                                                              
 non-                                                                       
 management                                                                 
 directors                                                                  
 DSUs                  384        (384)            -          -           - 
Share based                                                                 
 compensation                                                               
 expense                 -       6,426             -          -       6,426 
----------------------------------------------------------------------------
Balance at                                                                  
 September 30,                                                              
 2011           $2,247,999  $   16,210    $  (49,190) $(111,206) $2,103,813 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
THIRD QUARTER 2012 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 25, 2012. 
The conference call dial in numbers are 1-800-396-7098 or
416-695-6616 
A live webcast of the conference call will be accessible on
Precision's website at www.precisiondrilling.com by selecting
"Investor Centre", then "Webcasts". Shortly after the live webcast,
an archived version will be available for approximately 30 days. 
An archived recording of the conference call will be available
approximately one hour after the completion of the call until
November 1, 2012 by dialing 1-800-408-3053 or 905-694-9451, pass code
6282411. 
About Precision 
Precision is a leading provider of safe and High Performance, High
Value services to the oil and gas industry. Precision provides
customers with access to an extensive fleet of contract drilling
rigs, directional drilling services, well service & snubbing rigs,
coiled tubing services, camps, rental equipment, and wastewater
treatment units backed by a comprehensive mix of technical support
services and skilled, experienced personnel. 
Precision is headquartered in Calgary, Alberta, Canada. Precision is
listed on the Toronto Stock Exchange under the trading symbol "PD"
and on the New York Stock Exchange under the trading symbol "PDS".
Contacts:
Precision Drilling Corporation
Carey Ford
Vice President, Finance and Investor Relations
403.716.4575
403.716.4755 (FAX) 
Precision Drilling Corporation
Suite 800, 525 - 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
www.precisiondrilling.com